Foreign central banks dump long-dated Treasuries
The guest argued that foreign central banks are structurally divesting from long-dated US Treasuries to mitigate asset-freezing risks and reduce dollar exposure.
The argument
The guest highlighted that from 2015 to 2022, foreigners purchased only 15% of net new US debt, down from a historical majority. He noted that central banks are offloading 20-year and 30-year bonds first because they are locked up and easier to freeze than liquid dollar deposits.
The thesis, stress-tested
✓ What validates it
- ✓Continued decline in foreign central bank holdings of 20-year and 30-year US Treasuries
- ✓Global central bank gold holdings continuing to outpace Treasury holdings
▸ Risks discussed
- ▸Stablecoin market growth expanding fast enough to absorb excess Treasury supply
- ▸A reversal in geopolitical tensions leading to renewed trust in US assets
Hear it yourself
"Um, from 2015 to 2022, we issued around $10 trillion and foreigners bought 15% of that. So we went from foreigners buying the majority of net new debt, so China, Japan, Russia, all these other countries, buying a ton of U.S. debt to basically finance our deficits to basically them not financing us on net at all."
00:00 / 00:23
AFFILIATE LINK · ZORTIX MAY EARN A COMMISSION · NEVER A RECOMMENDATION TO TRADE