Being one of Washington’s closest partners no longer means reliably funding the US deficit. Countries and regions most aligned with the US bought a net $174.3 billion of Treasuries, excluding bills, in the first eight months of 2026, according to an analysis of Treasury and State Department data. That was the lowest for the period since 2021 and down more than 60% from a year earlier.
The shift is noteworthy in Asia, where economies running large surpluses are putting less of that money into US debt. Japan, the biggest foreign holder of Treasuries, bought just $389 million in the first eight months — down 99% from a year earlier. South Korea sold $23.8 billion, the most for the period in records going back to 1977. Taiwan was also a net seller.
There’s no single explanation for the shift. Several factors may be contributing, including weak currencies, rising yields at home, growing demand for stocks and unease over US policy. “The Treasury market isn’t losing foreign buyers — it’s losing automatic buyers,” said Masahiko Loo, a senior fixed-income strategist at State Street Investment Management, which oversees over $6 trillion.
The US government’s debt pile has climbed past $40 trillion, leaving the world’s largest economy more reliant on investors to fund its spending. At the same time, President Donald Trump’s tariffs and uncertainty over US policy have spurred concerns about the dollar’s longer-term outlook.
Source: Bloomberg Markets · Summarized by HeadlinesBriefing