'Sell America' is Over—Global Investors Are Sticking With US Treasurys

U.S. Treasury Department data show foreign investors net purchased more than $300 billion of U.S. assets in August and September, quashing fears of a post-tariff selloff and helping keep U.S. borrowing costs lower for households and the government. Japan remains the largest holder and Eurozone holdings have risen while Chinese holdings stabilized, even as governments and central banks modestly diversify reserves (including gold) and private-sector inflows into U.S. bonds have outpaced those into Canada and Europe; concurrently the dollar is down about 7% YTD and the MSCI Emerging Markets index has rallied roughly 27%. Strategists at TD Securities and others expect U.S. Treasurys to remain competitive into 2025, arguing that gradual diversification amid a growing global savings pool need not trigger a wholesale dumping of Treasuries that would raise interest rates.

Analysis

Treasury Department data show foreign investors were net buyers of U.S. securities exceeding $300 billion in August and September, quashing immediate fears of a post-tariff Treasury exodus after April’s episodic ‘‘Sell America’’ scare and following a delayed data release due to the government shutdown. Market commentary from ING and Oxford Economics characterizes the April outflow as a one-week trade and notes continued demand rather than systemic selling.

Sustained foreign demand is materially relevant because it helps keep U.S. borrowing costs lower for households and the federal government; Japan remains the largest holder with rising positions through September, Eurozone holdings have increased and Chinese holdings have stabilized. Private-sector inflows into U.S. bond funds have outpaced flows into Canada and Europe, coinciding with a roughly 7% year-to-date weakening in the U.S. dollar and a roughly 27% rally in the MSCI Emerging Markets index.

Strategists at TD Securities and others expect U.S. Treasurys to remain competitive into 2025, while central banks pursue gradual reserve diversification (not wholesale de-dollarization) and have boosted gold allocations, supporting bullion rallies. Key risks include renewed political pressure around Fed appointments—specifically a potential Powell replacement announcement—which could revive de-dollarization narratives and volatility in FX and sovereign flows.

Key Decisions for Investors

• Consider modestly increasing duration exposure to U.S. Treasurys or higher-quality sovereign debt given sustained foreign inflows of >$300 billion in Aug–Sep and strategist expectations of U.S. outperformance into 2025, while monitoring supply and Fed signals
• Add tactical exposure to gold as a portfolio hedge because central-bank gold buying has supported the rally and may act as a hedge against reserve-diversification shocks
• Rebalance emerging-market allocations selectively: take exposure to beneficiaries highlighted (Korea, Colombia, Greece, South Africa, Peru) while avoiding broad EM bets given regional disparities and recent strong performance
• Monitor political events closely (notably any announcement on the Fed chair) and be prepared to trim duration or hedge FX/sovereign positions if de-dollarization rhetoric or outflows re-emerge