US-Aligned Nations Cut Treasury Purchases by 60 Percent

US-aligned nations reduced their purchases of US Treasuries by 60 percent between January and August, a shift driven primarily by Asian economies. Japan, the largest foreign holder of US debt, saw its purchases drop 99 percent to 389 million dollars. South Korea recorded its largest sale of Treasuries since 1977, totaling 23.8 billion dollars.

This trend stems from weakening currencies, specifically the yen and won, alongside rising domestic yields in Japan and Europe. Investors also cited uncertainty regarding the tariffs and policies of President Donald Trump. While private investors now hold approximately 70 percent of federal debt, analysts warn this capital is more price-sensitive than the patient money previously provided by allies.

In contrast, countries least aligned with Washington reversed a four-year selling trend to buy 17.1 billion dollars in Treasuries. However, China continues to be a primary seller as it pursues a long-term diversification strategy. The US debt pile has now exceeded 40 trillion dollars, leaving Treasury Secretary Scott Bessent and Federal Reserve Chairman Kevin Warsh to manage market reactions to deficits and monetary policy.