Why US Treasuries Remain a Magnet for Global Investors Amid Record Foreign Holdings
2min read The global hunt for yield is intensifying, and US Treasuries stand at the epicenter of this demand. Despite historic debt levels and a looming “maturity wall” of $9.2 trillion in 2025, foreign holdings of US government bonds have surged to over $12.98 trillion—a testament to their enduring allure as a safe haven and a yield-driven asset class. For investors seeking stability in a fractured world, the case for overweighting long-dated Treasuries has never been clearer.
The $9 Trillion Milestone: A Test of Liquidity, a Beacon for Demand
By 2025, nearly one-third of all US Treasury debt will mature, with over $9.2 trillion due—a figure equal to 30% of US GDP. Combined with a projected $1.9 trillion federal deficit, gross issuance could exceed $10 trillion, a historic high. Yet this “maturity wall” has not deterred foreign buyers. Why? Because the US Treasury market remains the world’s deepest, most liquid, and safest repository of capital.
Regional Buying Patterns: A Global Treasury Love Affair
Foreign investors are not a monolith—they are a mosaic of demand:
- Japan ($1.1 trillion): Despite negative yields on its own government bonds, Japan retains its position as the largest foreign holder. The yen’s persistent weakness and the Bank of Japan’s reluctance to normalize rates ensure Tokyo will remain a buyer.
- China ($776.5 billion): While geopolitical tensions occasionally disrupt flows, China’s holdings have stabilized near $750 billion. Even as Beijing diversifies reserves, the dollar’s role as a global settlement currency keeps Treasuries indispensable.
- Eurozone ($2.1 trillion): With German Bunds yielding -0.4% and French OATs at 2.1%, European investors face a stark choice: accept negative returns or chase US yields. The 10-year Treasury’s 4.4% yield—versus -0.2% for Bunds—speaks volumes.
The Yield Advantage: A Lifeline in a Low-Yield World
The math is irrefutable. The US offers the highest real yields among major economies:
- US 10-year: 4.4% (vs. 2.1% for France, -0.4% for Germany, and -0.1% for Japan).
- Inflation protection: TIPS (Treasury Inflation-Protected Securities) provide a hedge against creeping prices, which even “low-yield” economies cannot fully suppress.
For pension funds, insurers, and central banks, Treasuries are a no-brainer. Their liquidity allows instant conversion to cash, while their safety minimizes geopolitical fallout. Even China’s modest reductions in holdings pale against the $10 trillion issuance—foreign demand is structurally insatiable.
The Case for Long-Dated Treasuries: Anchored by Dollar Dominance
Investors should prioritize long-dated Treasuries (10+ years) for three reasons:
1. Yield Gradient: The 30-year Treasury bond currently yields 4.7%, far above shorter maturities.
2. Dollar Liquidity Needs: Over 60% of global reserves and trade settlements rely on the dollar. Foreign buyers cannot escape dollar dependency.
3. Safe-Haven Flows: Geopolitical risks—from China’s trade policies to Middle East tensions—will drive investors to Treasuries during crises.
Navigating the Maturity Wall: Risks and Rewards
Critics warn of rollover risks and rising yields. Yet the Treasury’s strategies—laddered issuance, weekly buybacks, and short-term bill reliance—mitigate these fears. Even a 50-basis-point rise in yields would add just $90 billion to annual interest costs—a manageable sum given the $10 trillion demand pipeline.
Act Now: The Clock is Ticking
The window to lock in today’s yields is narrowing. As the 2025 maturity wave approaches, competition among buyers will intensify. Investors who underweight Treasuries risk missing out on a rare combination of safety, liquidity, and income.
Recommendation: Overweight long-dated Treasuries. Target 30-year bonds (TSLT) or ETFs like TLT. Their yields, paired with dollar resilience, offer asymmetric upside in a world starved for yield.
The verdict is clear: US Treasuries are not just a bond—it’s the bedrock of global finance. In a world of $9 trillion stakes, investors ignore this magnet at their peril.
Data as of May 2025. Past performance does not guarantee future results. Consult a financial advisor before making investment decisions.
