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If there is one thing that has caught the attention of the second Trump administration, it is how foreign investors behave in US assets. Perhaps even more so, it is their attitude to the safe haven of US Treasuries.
So the Trump administration is unlikely to be happy with reports this week that Chinese banks are being urged to limit their holdings of US Treasuries. Bloomberg It was reported this morning, citing unnamed sources, that Chinese regulators are advising financial institutions against holding large amounts of US government debt because of questions about intimacy and security.
Thinking of the Bloomberg report, UBS’s Paul Donovan noted this morning that despite the note that foreign investors are advised to rethink their strategy. He said that the report “does not include official assets, and Chinese banks are not major players in the US Treasury market. However, the idea that international investors may be less inclined to buy US Treasuries in the future (without dumping existing assets) has caught the attention of the markets. ” (China is the third largest holder of US Treasuries.)
In fact, any concerns over China only play into larger questions about whether investors should be hedging themselves against dollar headwinds. As Chris Turner, Global Head of Markets at ING wrote this morning: “Mainland China and Hong Kong together held $938 billion in US Treasuries last November. Comments like this come at a weak time for the dollar, when the dollar diversification theme is prevalent.”
China cannot inflict the level of damage on the US bond market that other countries can. For example, Japan has almost double the amount of reserves owned by China, with the UK also owning about $888 billion in US borrowing.
But this morning’s report tells a trend in the BRIC (Brazil, Russia, India, China) countries in Trump’s second presidency: The sale or rollover of America’s debt. The latest data from the Treasury for November 2025 shows that the holdings of these countries are generally on a downward path.
Brazil, for example. held $229 billion in American treasuries in November 2024, and 12 months later, it dropped to $168 billion. In India, November 2024, sees the country holding $234 billion in treasury holdings and by November 2025, this will decrease to $186.5 billion.
China followed a similar, but not identical, path. In November 2024 it owned $767 billion in US Treasuries which steadily increased to more than $900 billion in August 2025. A run-down then followed, to $888.5 in November 2025.
As Turner observed in November, the BRIC countries “quietly left the Treasury market,” he added: “We think that the decline in Indian assets is likely related to FX intervention to support the rupee, but suspect that there are geopolitical factors also at play. US assets rather than selling them directly.”
Avoid exposure
There is also little evidence to suggest that foreign investors have, or want to, use their holdings in American assets as a tool to discipline the Oval Office.
As Innes McFee, CEO of Oxford Economics, exclusively said luck at the end of January: “It’s a convenient story that fits political stories, but the truth is that there is no real evidence of capital outflows from US assets. What there is evidence is that the rest of the world is very exposed to US assets and historically more exposed than ever, partly because of the Magnificent Seven and all the AI stuff.”
“I think what happened last year was a sudden realization of, ‘We still want to be exposed to the US, we don’t want to sell our assets in such a strong economic growth, but we want to monitor our exposure.’ And so what you see among many pension funds, around the world investing in US assets, is a hedging of that exposure. That is how you have a situation where the dollar falls, but there is no capital outflow. For years, people have been talking about China arming its holdings in US Treasuries — I don’t think there’s much credibility in those statements.
