Treasury Secretary Bessent highlights strong foreign demand for US assets
In brief
- Treasury Secretary Bessent cites recent auctions as among the most successful in two decades
- Foreign Treasury holdings reach $9.3 trillion, representing 30-32% of publicly held US debt
- Foreign equity inflows accelerate to 2.8% of GDP through June 2026, outpacing bond purchases
Foreign Holdings Surge
Foreign holdings of US Treasuries now sit at roughly $9.3 trillion, representing about 30-32% of all publicly held debt. That concentration underscores the centrality of foreign capital to US fiscal dynamics. Foreign investors have been pouring into US equities at an average rate of 2.8% of GDP through June 2026, a pace that's historically unusual. Foreign inflows into Treasuries ran at about 2% of GDP over the same period, meaning equities are drawing capital faster than bonds — a pattern that hasn't occurred consistently in decades outside of crisis periods.
Yields and Fiscal Pressures
The appetite for US assets comes as borrowing costs climb. The 10-year Treasury yield has climbed above 5%, its highest level since 2007, and the 30-year yield pushed to 5.32%. These levels reflect the market's demand for compensation amid the national debt itself crossed the $40 trillion threshold earlier this year. Bessent's framing of this environment as evidence of confidence rather than concern hinges on attributing capital flows to fundamentals.
What's Driving the Inflows
Bessent attributed the capital inflows to a combination of regulatory certainty, tax policy, trade frameworks, and energy stability. He also pointed to the dollar's staying power. Bessent pointed to rising volumes of dollar-denominated transactions globally as evidence that the greenback's reserve currency status remains intact. The implication is that despite talk of de-dollarization from some quarters, actual capital allocation tells a different story.
"Capital flows are a revealed preference. Countries and institutions can talk about diversifying away from the US all they want. The money is moving in the opposite direction." — Scott Bessent, US Treasury Secretary
