How Foreign Demand for US Debt Is Shrinking

In Episode 58 of The National Debt Podcast, Lucas and Luna examine a quiet shift in the buyer base for US Treasuries. Foreign official holdings have dropped by roughly $300 billion over the past two years, even as the federal debt crossed $38.5 trillion and the debt-to-GDP ratio hit 122.6 percent. Lucas walks through who has been selling—Japan, China, and even some European allies—and who is stepping in to fill the gap: domestic banks, pension funds, and the Fed's overnight reverse repo facility. They discuss what happens if the marginal buyer shifts from price-insensitive central banks to yield-hungry private investors, especially with the 30-year yield hovering near 4.93 percent and the interest on reserve balances stuck at 3.65 percent. Luna questions whether higher yields could crowd out private investment, and Lucas points to the flattening 10Y-2Y spread as a warning signal. The episode ends with a look at upcoming Treasury refunding announcements and the risk of 'buyer strikes' at auction. No panicked predictions—just a sober look at who holds the debt and why it matters for rates and growth. #TreasuryAuctions #ForeignHoldings #Japan #China #DebtToGDP #FederalDebt #YieldCurve #BondMarket #FiscalPolicy #Economics #FedReserve #InstitutionalInvestors #SovereignDebt #ReverseRepo #NationalDebt #FexingoBusiness #BusinessPodcast #FiscalOutlook Keep every episode free: buymeacoffee.com/fexingo