Asian Allied Nations Slash U.S. Treasury Purchases by Over 60%
nashnova research
The 57 economies most aligned with Washington bought just $174.3 billion in net Treasuries over the first eight months of 2026 — down more than 60% year-on-year; Japan's net purchases collapsed 99%, and South Korea posted its largest-ever net sell-off. The automatic bid for U.S. debt is breaking down.
How much less are allies buying?
Fifty-seven U.S.-aligned countries and territories net-purchased $174.3 billion in Treasuries (excluding T-bills) in the first eight months — the lowest for that period since 2021.
Japan, the largest foreign holder, bought a net $389 million — a 99% year-on-year collapse.
South Korea net-sold $23.8 billion, the biggest net sell-off for that period since records began in 1977; Taiwan also flipped to net seller.
This means → the core Asian bid for Treasuries is contracting across the board, not in one country alone.
Why did they stop buying?
The yen sank to a near-four-decade low; the won hit its weakest since 2009 — currency depreciation eroded dollar-denominated purchasing power directly.
Some governments sold Treasuries and drew on FX reserves to defend their currencies; Japanese authorities intervened over the summer.
At the same time, local yields in Japan and Europe rose, giving investors alternatives. Yang Joo Kyung, global fixed-income head at Korea's Kiwoom Asset Management, said outright that Japanese government bonds look relatively more attractive.
What does the loss of "automatic buyers" mean?
Brad Setser, senior fellow at the Council on Foreign Relations, calls the shift "dereservification" — foreign assets increasingly bypass central-bank reserve channels and flow to pension funds, state banks, and other large institutions instead.
In plain terms = surplus economies in Asia used to earn dollars and recycle them into Treasuries almost on autopilot; now that money is going into equities, deposits, and domestic bonds instead of looping back.
Masahiko Loo, senior fixed-income strategist at TD Asset Management (over $6 trillion AUM), put it sharply: "The Treasury market isn't losing foreign buyers — it's losing automatic buyers."
What is the key variable ahead?
U.S. government debt has crossed $40 trillion, and tariff policy plus broader policy uncertainty are weighing further on long-term dollar confidence.
This means → as the automatic-buyer mechanism keeps weakening, whether the Treasury can absorb massive supply at acceptable rates will drive the next move in the yield curve.
This reflects a deeper signal: allied trust in dollar assets is shifting from "default allocation" to "allocation that needs a reason."
市场有风险，内容仅供研究参考，不构成投资建议。