As you have no doubt read or heard, ‘everyone’ wants to get rid of their US debt holdings, whether it be China, Japan or other creditors. In other words, ‘nobody’ wants to have anything to do with a country – the United States – that is imposing tariffs at every turn and running the risk of plunging its economy into recession. But what’s really going on? Is it ‘propaganda’ or hard facts?
The facts
In April 2025, the structure of holders of US debt showed increasing diversity, contrary to the generally accepted idea of a massive withdrawal of foreign investors. Record purchases in February 2025, led by the eurozone, Japan, China, Canada and financial centres, show renewed interest in US Treasury securities.
Contrary to the alarmist rhetoric, traditional creditors – including China and Japan – are strengthening their positions after years of partial withdrawal. At the same time, federal pension funds and the Federal Reserve continue to play a central role in holding debt, although their relative share has fallen in the face of soaring total debt.
The recent increase in purchases by US commercial banks underlines the growing appeal of Treasuries, against a backdrop of positive real rates and macroeconomic uncertainty. In short, the facts largely contradict the narrative of an abandonment of US debt: on the contrary, recent flows testify to broader and stronger support.
The reality of the figures
US debt continues to attract attention, not least because of major shifts in the structure of its ownership. In February 2025, foreign holders bought a record $290 billion of US Treasury securities – the biggest monthly increase since June 2021 – taking their holdings to an all-time high of $8.82 trillion.
Foreign creditors
Foreign countries remain key players in US debt ownership, accounting for around 25%. These include:
- Eurozone: with an increase of $52 billion in February ($253 billion over one year), the eurozone reached a record of $1.83 trillion, topping the list of creditors. The main holders are Luxembourg, Ireland, Belgium and France.
- China + Hong Kong: together, they bought $41 billion in February ($66 billion over one year), taking their holdings to $1.05 trillion. Although that’s still a long way from the 2015 peak, the increase marks an inflection point.
- Japan: its assets rose by $47 billion in February, wiping out almost all the sales linked to support for the yen in 2024. They are now back to 2012 levels.
- Canada: its assets jumped by $55 billion in February to a record $406 billion – almost four times more than in March 2021.
- United Kingdom: +$10 billion in February (total $750 billion), +$39 billion over one year.
- Financial centres (Luxembourg, Belgium, Ireland, Cayman, Switzerland): +$42 billion in February ($2.6 trillion in total). These jurisdictions are often home to the assets of US companies domiciled abroad for tax purposes.
The only notable exception is Switzerland, which reduced its assets by $10 billion in February ($291 billion in total).
Despite the increase in their holdings since March 2020, their share of the US national debt has fallen to 25.0%, its lowest level since 2007. This is due to the almost exponential increase in other holders of US debt.
For the record, when we talk about foreign holders, they include central banks, government entities and private sector entities like companies, banks, bond funds and individuals.
- The American government: At the end of 2024, federal pension funds, including those for civilian employees, the military and social security, held more than $7.1 trillion in US Treasury bonds, representing almost 21% of total government debt. Although these investments have increased in value, their relative share has fallen compared with 2008, when the government held 45% of the debt.
- The Fed: As of 2 April 2025, the Federal Reserve held $4,219 billion in US Treasuries, or around 14.8% of total government debt. This figure represents a slight reduction on the 17.6% recorded previously, reflecting the continued reduction in the Fed’s balance sheet as part of its quantitative tightening programme.
- US commercial banks: In March 2025, US commercial banks held $1,770bn in US Treasuries, representing around 6.2% of total government debt. This level marks an increase on the 4.4% previously observed, indicating increased interest by banks in Treasury securities.
Conclusion
The most recent data shows that, far from being unloved, US debt continues to attract massive numbers of foreign investors and domestic institutions. Far from alarmist rhetoric, these are historic flows that reinforce the credibility of Treasury bonds, even in times of geopolitical tension. So, the reality is clear: despite the concerns, the market still has confidence in the US economy as a pillar of global financial stability – whether we like it or not.
By John Plassard, senior investment specialist at Mirabaud Group
