Treasurys are losing foreign appeal in a historic capital flow reversal
U.S. bonds are losing their appeal among overseas investors in what strategists say is a historic capital reversal.
TL;DR
- Foreign investors are prioritizing U.S. equities over U.S. Treasurys, a historic shift.
- Overseas holdings of U.S. Treasurys have fallen significantly, while equity holdings have increased.
- The trend is driven by the strength of the American private sector (AI, profits) versus concerns about the U.S. public sector's debt and deficits.
- Global bond markets have seen a sell-off, with U.S. Treasury yields reaching multi-month highs.
- Norges Bank Investment Management and China have reduced their holdings of U.S. Treasurys.
- Foreign ownership of U.S. equities is at all-time highs, with substantial net equity inflows.
- Major firms like BlackRock are overweight U.S. equities and underweight long U.S. Treasurys due to a changing investment landscape.