U.S.-aligned countries slash Treasury purchases, led by Asia - report

U.S.-friendly countries have slashed Treasury purchases, led by Washington's closest partners in Asia, Bloomberg News reported, citing an analysis of Treasury and State Department data.

Countries most aligned with the U.S. bought a net $174.3B of Treasurys, excluding bills, in the first eight months of 2026. That's the lowest for the period since 2021 and is down over 60% from a year ago.

Japan, the biggest foreign holder of Treasury securities, bought $389M in the first eight months of the year. That's 99% lower than a year earlier.

South Korea reportedly sold $23.8B of Treasurys, the most for the eight-month period in records going back to 1977, while Taiwan was also a net seller.

These Asian countries usually convert their surpluses into dollars and park the money in U.S. Treasurys. But weakening currencies eroded their buying power this year, pushing governments to dip into reserves.

Meanwhile, the U.S. national debt has crossed $40.5T, leaving the government more reliant on investors to fund its spending. Uncertainty over U.S. policy has fueled concerns over the dollar's long-term outlook.

With yields rising in markets such as Japan and Europe, investors now have more alternatives to U.S. Treasuries.

"The Treasury market isn't losing foreign buyers — it's losing automatic buyers," Masahiko Loo, senior fixed-income strategist at State Street Investment Management, told Bloomberg. "An increasingly unpredictable U.S. makes large structural overweights and the automatic recycling of capital into Treasuries harder to justify."

The analysis classifies countries as most-, least- and neutrally-aligned by how often their votes on United Nations resolutions match those of the U.S.

The numbers represent net purchases (buying minus selling) of Treasurys with an original maturity of more than one year. They cover 57 countries and regions, including official and private investors.

Interestingly, countries least aligned with the U.S. bought $17.1B of Treasuries from January to August. That's a tenth of what U.S.-aligned countries bought during that period.

It's important to note that private investors, such as hedge funds and banks, have boosted their share of federal debt to ~70% — near the highest level since 1990.

But they are more sensitive to price, meaning markets can react sharply if investors grow uneasy about U.S. monetary policy, the economy and widening deficits.