Not exactly selling America…

The number of US Treasuries held by foreign investors was near record highs in April, even as US President Donald Trump’s Liberation Day tariffs triggered one of the steepest sell-offs in the asset class in over two decades, Bloomberg reports. Foreign holdings came in at USD 9.01 tn — just shy of March’s all-time high following sales of US bonds and notes, according to US Treasury data. This came despite concerns over a wave of outflows from American debt and equity markets following the tariff announcements.

IN CONTEXT- Trump’s tariff announcement in early April triggered a historic sell-off, with Treasuries posting their worst weekly performance in over 20 years. A weak 20-year bond auction in May added to the sell-off, though 30-year and 20-year offerings later saw better take-up.

But no mass exit: Despite this, buyers were ramping up holdings of long-term Treasuries, with official institutions being net buyers. Foreign investors were net sellers of US agency bonds and equities, but increased their exposure to long-term corporate debt, suggesting selective rebalancing rather than a broad retreat.  

Big buyers didn’t blink: Japan, still the top holder, increased its holdings by USD 3.7 bn to USD 1.13 tn. The UK added USD 28.4 bn, overtaking China for the number-two spot with USD 807.7 bn. Belgium — often seen as a proxy for Chinese custodial accounts — rose USD 8.9 bn to USD 411 bn.

China pulled back, Canada dumped: China’s holdings dropped by USD 8.2 bn to USD 757 bn, continuing a multi-year retreat. Canada posted the largest decline, offloading nearly USD 58 bn to bring its total to USD 368.4 bn. The Cayman Islands — a hub for hedge funds — also reduced holdings by USD 7 bn.

“The ‘Sell America’ narrative is an over-exaggeration,” Morgan Stanley’s Vishal Khanduja told Bloomberg elsewhere, though warning of “slow and bumpy [USD] depreciation” ahead. Jamie Patton of TCW Group also pushed back on talk of capital flight, saying there’s a “big difference between valuation and the reserve status of the USD or Treasuries as a de facto safe asset.”

Concerns that US Treasuries “safe haven status” is in jeopardy still abound, with the latest red flag being the lack of a rally during the Israel-Iran flare-up — which would typically be a haven bid moment.

MARKETS THIS MORNING-

Asian markets are mixed once again, with China’s CSI 300 trading flat following the People’s Bank of China’s decision to hold interest rates steady, while Japan’s Nikkei lost 0.1% after inflation figures from May showed consumer prices rising to their highest level since 2023. South Korea’s Kospi gained 0.65%. Wall Street futures are down after stocks paused trading yesterday for the Juneteenth holiday.

THE CLOSING BELL-

The DFM fell 0.7% yesterday on turnover of AED 684.4 mn. The index is up 2.1% YTD.

In the green: International Financial Advisors (+14.1%), Taaleem Holdings (+5.6%) and Ekttitab Holding Company (+3.4%).

In the red: National General Ins. Company (-10.0%), Dubai Refreshment Company (-9.8%) and Al Mazaya Holding Company (-9.8%).

Over on the ADX, the index fell 0.8% on turnover of AED 1.3 bn. Meanwhile, Nasdaq Dubai was down 1.3%.