Foreign investors piled into U.S. Treasuries in March, pushing total holdings to a record $9.05 trillion even as the specter of higher tariffs loomed.
March Surge Continues Three-Month Streak
Treasury Department data show overseas portfolios growing by $233 billion since February, marking a nearly 12 percent increase year over year.
Japan retained the top slot with $1.13 trillion, adding modestly for a second straight month.
The United Kingdom, often a proxy for hedge-fund custody, overtook China for the No. 2 position at $779 billion.
Beijing’s stake fell to $765.4 billion, extending a multi-year downtrend dating back to 2018.
Tariff Shock Alters April Landscape
Analysts caution that the buying spree may have reversed in April after the Trump administration unveiled steep new levies on April 2, briefly driving 10-year yields as high as 4.6 percent.
A 90-day tariff pause later in the month helped steady the bond market, but many foreign accounts are thought to have trimmed exposure during the initial sell-off.
Flow Picture Mixed Across Asset Classes
Transactional flows still showed a $123 billion net purchase of Treasury notes and bonds in March, alongside $60.4 billion into corporates and $10.4 billion into U.S. equities.
Agency debt saw $10.4 billion in outflows, while combined short- and long-term securities posted an overall $254.3 billion net outflow once banking flows were included.
Chinese Holdings Keep Declining
China’s Treasury cache now sits near levels last seen in early 2009, reflecting both deliberate diversification and lingering geopolitical tensions.
Market Reaction
U.S. stock benchmarks closed higher on the day the data were released, with the Dow up 0.8 percent, the S&P 500 ahead 0.7 percent, and the Nasdaq stronger by 0.5 percent.
The 10-year yield ended March at 4.425 percent, up slightly from 4.18 percent at the start of the month.
Looking Ahead
Whether the record foreign demand resumes may hinge on the outcome of trade negotiations and the trajectory of U.S. fiscal policy.
A sustained rebound in yields could entice buyers back, but any escalation in tariff rhetoric risks another bout of selling.