US Debt Binge: Foreign Investors Scoop Up Treasuries At Near-Record Pace With $34.8 Billion Increase As Japan Leads

Foreign investors are purchasing U.S. government debt at near-record levels, driving total foreign holdings to a staggering $9.3 trillion in January, even as structural cracks emerge in the broader bond market.

Japan And Allies Drive The Surge

Global demand for U.S. Treasuries saw a sharp uptick at the start of the year, with total foreign holdings swelling by $34.8 billion, according to Macromicro.me data shared by The Kobessi Letter.

Japan solidified its position as the largest foreign creditor, purchasing $39.8 billion to bring its total stockpile to $1.2 trillion—the highest since July 2022.

The United Kingdom closely followed, adding $29.3 billion to reach $895.3 billion, its third-highest level on record. The European Union also increased its holdings by $8 billion.

Collectively, foreign investors now own more U.S. debt than ever before, acting as a crucial pillar for the growing federal deficit.

The Great Chinese Retreat

Despite a modest $10.9 billion increase in January, China's overarching strategy reflects a sharp divergence from traditional U.S. allies.

Beijing has systematically reduced its reliance on the U.S. dollar amid geopolitical tensions, pivoting instead toward assets like gold.

Renowned economist Mohamed El-Erian recently highlighted this major structural shift in global finance. “China's share of total UST holdings has dropped even more — to 7%, a quarter of the 28% peak reached 15 years [ago],” El-Erian noted, raising long-term questions about who will absorb future debt issuances.

Fiscal Fragility And Market Strains

This record foreign buying masks severe underlying pressures in the Treasury market. Persistent inflation, exacerbated by Middle East energy shocks, has rendered traditional government bonds an unreliable portfolio hedge.

BlackRock recently warned that Treasuries “are not providing ballast as equities fall,” fundamentally threatening the classic 60-40 portfolio approach.

Meanwhile, rising yields are intensifying borrowing costs for a heavily indebted government, with the 10-year note creeping toward a critical 4.5% threshold.

Highlighting the dire fiscal trajectory, Senator Rand Paul recently pushed for aggressive spending cuts to balance the budget, warning, “The Treasury just quietly admitted the U.S. government is insolvent.”

Change In 10-Year Treasury Yields Over 15 Years

Based on the data from the Federal Reserve Bank of St. Louis, here are the percentage changes in 10-year Treasury yields as of March 25, 2026. The current 10-year Treasury yield stands at 4.36%.

The most widely recognized and traded ETF for tracking the 10-year yield curve is the iShares 7-10 Year Treasury Bond ETF (NASDAQ:IEF). It is down 1.16% year-to-date, 0.95% over the last six months, and up 0.77% over the last year.

Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.

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