The FOMC meeting minutes won’t be the only standout event on the economic calendar today. This is one that will also be heavily watched by traders and investors, that especially since the US dollar has been heavily scrutinised in recent months. For all the talk about de-dollarisation and market players selling US assets, it hasn’t quite showed up on demand for Treasuries.
The previous report for November 2025 showed that foreign investor holdings of Treasury securities hit a record $9.36 trillion. And that is despite the fact that China’s holdings dropped further to ~$683 billion, its lowest since 2008.
It’s no surprise that Japan continues to top the list with ~$1.20 trillion in holdings, with the UK in second with ~$888 billion in holdings.
That being said, the important detail when looking into this report is to not take the numbers at face value. It is best to remember that the numbers here are only a measure of each country’s holdings of Treasuries in US custodians. The thing about this is that some countries, or should I just single out China in this case, are still buying Treasures via non-US custodians.
And that shows up in the numbers for the likes of Belgium and Luxembourg. As seen from the chart above, their holdings are going toe-to-toe with some of the major players in the world. And that is mostly because they act as a custodial hub for other foreign holders.
So, that’s one thing to take note of.
The other key thing is to be aware of the continued shift in trend in terms of structural holdings of Treasuries and US debt. In other words, who is really driving the demand for Treasuries.
And in this instance, it is no longer central banks for the most part. Instead, private investors i.e. hedge funds, pension funds, asset managers are now the dominant buyers. They have been for quite a while now. In the November report, private buying amounted to ~$158 billion – more than double the ~$64 billion by official institutions.
What does this mean exactly?
It shows that US funding is now becoming more increasingly dependent on market-based capital and not so much so on reserve recycling. To put things more simply, it’s more about yield and financial demand rather than being a case of a geopolitical feature.
So despite all the de-dollarisation rhetoric and backlash against the US since last year, Treasuries appear to remain structurally indispensable globally.
However, it’ll be wrong to quickly assume that Treasuries and the dollar system remains robust. Yes, it is still holding up strongly but so is the shifting trend to other markets.
As a reminder, gold’s share of global central bank reserves also surpassed that of Treasuries late last year. And that is the first such structural shift in the balance of holdings since 1996.
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