US Treasury bond holdings by foreign allies and partners

Data from the US Treasury and State Department indicates a significant reduction in net purchases of US government bonds by close allies. During the first eight months of 2026, these nations purchased a net total of $174.3 billion, a decrease of over 60% compared to the previous year and the lowest level for this period since 2021.

Specific shifts include Japan, the largest foreign creditor, seeing net purchases drop by 99% to $389 million. South Korea recorded a net sale of $23.8 billion, its highest net selling level for this period since 1977, while Taiwan also became a net seller. Analysts suggest this trend is driven by unpredictable US policies and weakening local currencies, noting that some governments may sell US securities to support their own currencies.

Additionally, China and Japan reduced their holdings of US Treasury debt in August. China’s holdings fell to $590.7 billion, the lowest level since 2008, while Japan’s holdings decreased to approximately $1.07 trillion. This reduction in foreign demand has contributed to rising Treasury yields, which may influence global interest rates and market liquidity.