Treasury bonds have sold off recently, partly due to skepticism about Fed inflation hawk Kevin Warsh but also because the buyer base has shifted. Over the past decade, central banks and official reserve managers have eased their Treasury purchases, while private investors like mutual funds, banks, and households have absorbed most new issuance.

Barclays analysts Demi Hu and Anshul Pradhan note that official holdings peaked at $6 trillion during Fed asset purchases but fell to $4 trillion post-2022. Foreign official holdings stayed flat at $4 trillion despite market growth. Private investors absorbed $19 trillion of the $25 trillion increase in marketable debt since 2006.

By 2026, the private sector held 73% of Treasuries versus 27% for the official sector, reversing the 50-50 split seen in 2006 and 2016. This shift makes demand more yield-sensitive, raising term premiums—the extra yield investors require for longer-term bonds.

NY Fed official Roberto Perli confirmed this ownership shift could lift term premiums. The NY Fed's term premium model shows positive territory, potentially returning to pre-financial crisis levels of 1.3 percentage points, implying higher yields ahead.