Something subtle, but significant, is happening beneath the surface of the U.S. financial landscape – foreigners are holding fewer Treasuries and more equities. To some, this might sound like a routine asset reshuffle, but it reflects a reassessment of how the world wants to be exposed to U.S. assets.
For decades, U.S. government bonds were the global comfort investment— liquid, safe, and, most importantly, apolitical. But that last part has started to fray. A combination of rising debt levels, repeated debt-ceiling standoffs, and the increasing use of financial sanctions has made even America’s most holy asset feel a little less neutral.
The U.S. Department of the Treasury data shows that foreign investors are no longer treating Treasuries as untouchable. While overall demand for U.S. assets remains strong, more of that capital is now flowing into equities, especially large-cap tech and multinationals with global footprints.
This isn’t about risk appetite suddenly soaring. It’s about foreign holders hedging against political dysfunction and dollar weaponization by seeking growth and returns in U.S. equities rather than the perceived safety of government paper.
A Shift Within Institutional Thinking
Global asset managers are starting to frame the shift as more than just cyclical rotation. Franklin Templeton recently flagged the trend, noting their preference for international developed government bonds over US Treasuries.
“US debt is already substantial, exceeding US$36 trillion. The “Big Beautiful Bill” is projected to exacerbate this situation, according to the Congressional Budget Office, potentially …