Treasury securities have lost allure for foreign central banks and governments, whose holdings dropped to $3.77 trillion in July, roughly 2012 levels despite a tripling of debt outstanding. The share of "foreign official" holdings collapsed to 12.8%, the lowest since 1993, leaving the US less dependent on traditional financiers. In July, total foreign holders shed $50 billion, bringing combined holdings to $9.25 trillion.

Japan dumped $13 billion, reducing holdings by $135 billion from February to July as the government intervened to support the collapsing yen. These sales proved hugely profitable in yen terms due to the currency's plunge against the dollar. However, opaque foreign financial centers stepped in, where US hedge funds and companies hold debt.

Estimates suggest roughly $2 trillion is held by hedge funds engaged in leveraged basis trades, while US companies keep foreign profits in entities in Ireland and elsewhere, avoiding repatriation taxes. Apple became a poster child during a 2013 Senate investigation. These "private" holdings now account for 31.9% of marketable securities, matching 2020 lows.

Long-term notes and bonds make up 84% of total foreign holdings, while short-term bills comprise the rest. The surge in private holdings, driven by leverage and tax strategies, represents hot money that fueled market seizures in March 2020, a risk the Fed monitors closely as positions have grown significantly larger.