International Investors Drive Record in U.S. Debt

International investors of U.S. Treasury bonds rose by $290 billion in February, marking the largest monthly increase since June 2021. According to the Treasury Department, the total reached a historic record of $8.82 trillion, driven by strong purchases of both long- and short-term securities.

Canada and Japan Lead the Acquisitions

Canada stood out with net purchases of $46.5 billion in long-term bonds, reversing January’s divestments. Analysts attribute this rebound to rising geopolitical tensions and political pressure from Donald Trump. Japan also significantly increased its holdings by $46.6 billion, reaching $1.13 trillion—its highest level since April 2024.

China Strengthens Its Position

China boosted its total holdings by $23.5 billion, raising its stock to $784.3 billion. Although it sold $4.8 billion in long-term bonds, it offset this with $15.1 billion in short-term debt. Analysts note that part of the increase reflects valuation gains amid rising Treasury prices.

United Kingdom and Belgium Also Increase Holdings

The United Kingdom expanded its position by $10.1 billion, totaling $750.3 billion. Belgium—often seen as a possible custodian of Chinese accounts—raised its holdings by $17 billion, despite marginal net sales in both types of bonds.

Boom Ahead of Trump’s Tariff Announcement

This renewed international appetite for U.S. debt occurred before Trump’s April 2 announcement of new tariffs, which triggered the largest sell-off in the Treasury market since 2001. Investors are now watching closely for signs of future shifts in foreign capital flows.

Uncertainty Persists Over Potential Chinese Retaliation

While some speculate that China may respond to the tariffs, former Treasury Secretary Janet Yellen downplayed the likelihood of a large-scale bond sell-off by Beijing. Significant moves are not expected until April data is released in June.

Wall Street Rebounds Amid White House Tariff Pause

Calm returned to Wall Street after a tense week triggered by President Donald Trump’s trade policy…

Foreign Investment Loses Structural Prominence

Foreign participation in the Treasury market has declined from over 50% in 2008 to around 30% today. Still, key jurisdictions such as the Cayman Islands and the United Arab Emirates continue to increase their holdings, reflecting sophisticated financial strategies and emerging geopolitical interests.