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27/06/2025
Foreign investors reduced their holdings of U.S. assets in April, but only to a very small extent
In recent weeks the debate about international investors turning away from the U.S. dollar and American assets has intensified. The tariff policy of the new U.S administration has scared off investors worldwide - at least, the reports suggest. The argument is that investors are withdrawing their capital and investing it in other regions instead. The performance of the U.S. dollar seems to confirm this theory; the broad Bloomberg Dollar Spot Index has weakened by around nine percent since the beginning of the year.[1]
There is some fund-related data that seems to corroborate this theory. The Bank of America’s June monthly fund manager survey shows that investor anxiety about the U.S. has resulted in dollar assets being underweighted to levels not seen in 20 years.[2] But we believe these figures should be treated with caution. Other evidence on investor positioning gives a different perspective.
Treasury International Capital (TIC) data published by the U.S. Department of the Treasury allows more in-depth analysis and probably offers the most comprehensive overview of capital flows into and out of U.S. assets.[3] The disadvantage of this data is that it is published with a time lag. However, last week's publication of the figures for April provides an initial insight into shifts in capital allocation following Trump's tariff announcements.
Data for April shows a net outflow in external holdings of U.S. government securities of around USD 36 billion. However, given total net foreign holdings of just above USD 9 trillion, this fall is insignificant. There are, however, significant differences in flows by country. The largest decline was seen in Canadian holdings, which fell by around 58 billion (or around 14 percent of Canada’s total holdings), from 426 billion to 368 billion U.S. dollars. Chinese holdings of U.S. Treasuries fell to their lowest level since 2009, while Belgian holdings of U.S. government bonds — widely regarded as an implicit indicator of Chinese offshore holdings — actually rose. Japan and the UK also increased their holdings. These two countries are now the U.S.'s largest creditors.
Sources: Bloomberg Finance L.P., DWS Investment GmbH as of 6/24/25
According to the data, shifts have also been observed away from the U.S. stock market, while net purchases were seen in U.S. corporate bonds. Closer inspection reveals that the capital flows are not as uniform as they seem.
The bigger picture must be kept in mind. “The sell-off in the U.S. dollar and U.S. Treasuries by foreign investors appears to be greatly exaggerated in light of TIC data and purchases totaling more than USD 400 billion since the beginning of the year,” says George Catrambone, Head of Fixed Income Americas at DWS.
In our view, it will only be possible to draw serious conclusions about whether and to what extent the outflows from U.S. assets are significant once the TIC data for May and June are published. In light of the fiscal challenges associated with President Trump’s “One Big Beautiful Bill Act” and mounting concerns about the deficit, it is reasonable to assume that sales might have increased. But whether that would mark the beginning of a lasting downward trend in foreign holdings of U.S. assets is a far bigger question.
All financial data – unless otherwise stated – from Bloomberg Finance L.P. as of 6/24/25
MarketWatch as of 6/17/25
U.S. Department of the Treasury as of 6/18/25
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