Foreign Buying of US Treasuries Just Fell 88% in a Single Month

If you were to head to Bloomberg, CNBC, or Yahoo Finance this morning and see virtually all green across the board in US markets, you wouldn’t think it’s a sad day for America.

And yet, despite stocks being up and investors positively effervescent, it is indeed a sad day, because today marks the first real capitulation by the Treasury Department.

Stocks are up because the Treasury Department announced this morning that it will double repurchases of long-dated government bonds. If that sounds boring and mundane, it’s not.

For the past several weeks, Treasury yields have been skyrocketing. Our readers won’t be surprised by this— we’ve been predicting this and telling the story for quite some time.

In short, the bond market is rapidly losing confidence in America. And that’s especially true for foreign governments and central banks.

For most of the past eighty years, pretty much every foreign government on the planet parked their national savings in US government bonds. It was a no-brainer. US Treasury bonds paid interest. They were extremely liquid and could be sold in seconds. And they are backed by the wealthiest, most powerful, most creditworthy nation on Earth.

So the rest of the world happily lent their financial surpluses to the US government and asked few questions.

At peak (in 2011), foreigners owned nearly half of all marketable US Treasury bonds. Fifteen years later they hold less than a third, and that proportion is sliding quickly.

Earlier this week the Treasury Department reported that foreigners continue to trim their holdings of US government bonds. In fact, so far this year, foreigners have only purchased 7% of net US debt issuance. In June, their purchases of Treasury bonds and notes fell 88% in a single month, and once you add in the Treasury bills they sold, foreigners were net SELLERS of US government debt.

It’s not hard to understand why; between the political theater, rising deficits, and inability to cut even obvious fraud, foreigner are no longer as willing to risk lending money to America… especially when they have to take that risk for three decades (i.e. holding a 30-year Treasury bond).

As a result, foreigners are selling. And as they sell, the natural consequence of the bond market is that Treasury yields have been rising… especially for the least popular securities like the 30-year Treasury bond.

This morning the US government officially staged an intervention. They signaled to the bond market, and to the world, that they’re willing to step in and buy back their own debt in order to prop up the market.

Investors cheered. But, again, this is actually quite sad news. It is tantamount to the Treasury Department capitulating and acknowledging that they have lost the confidence of foreign investors.

We’ve been writing about this trend for quite some time, encouraging our readers to consider investing in gold… as well as gold producers.

In our most recent edition of Schiff Sovereign: Premium, for example, we wrote about three major gold companies that we believed were significantly undervalued. They’re all up 10% just this morning… because gold is on an absolute tear.

Why gold?

As foreign governments and central banks have been moving out of US dollars, they’ve had to park that money into some other asset. At the moment, gold is realistically the only viable strategic reserve asset that is extremely liquid, widely accepted around the world, and carries zero counter-party risk.

Foreign countries have already been buying up gold over the past few years as their confidence in the US has waned; from 2022 through 2025 they bought a few hundred billion dollars’ worth— roughly 2% of their financial reserves. And that modest purchase alone took the gold price from about $1,600 to more than $4,000.

Global central banks are back in the gold market buying again today. And since we can’t exactly hold our breath that the US government is going to get its fiscal house in order anytime soon, we can only conclude that the central bank gold-buying trend will continue… and accelerate.

This trend is bad for America. But it’s good for gold. And it’s even better for gold producers.

P.S. One of the other companies we’ve covered in Premium, a gold producer, is up a bit this week, but we still think it is wildly undervalued. So does its own CEO, who told analysts on this week’s earnings call that the company is “significantly undervalued.”

It has no debt, just reported the most profitable first half in its history, and trades at roughly two times its annual cash flow.

We walk through the numbers in our latest edition of Schiff Sovereign: Premium, which is just $9 per month. Click here to learn more.

Source

Simon Black is an international investor, entrepreneur and permanent traveler. His daily letter is both educational and entertaining, and we suggest that those who want unbiased, actionable information about global opportunities sign up for Sovereign Man’s free, actionable newsletter at http://www.SovereignMan.com.

From Simon Black of SovereignMan.com

Source: https://www.schiffsovereign.com/trends/foreign-buying-of-us-treasuries-just-fell-88-in-a-single-month-155645/