US Allies’ Treasury Net Buying Drops Over 60% as Japan Nearly Stops Buying

US-aligned countries and regions net bought $174.3 billion of US Treasuries excluding bills in the first eight months of 2026, down more than 60% from the same period a year earlier and the lowest comparable level since 2021, according to Bloomberg-reported Treasury and State Department data. Japan, the largest overseas holder of US Treasuries, net bought only $389 million over the period, down 99% year-on-year. South Korea was a net seller of $23.8 billion, its largest net sale for the comparable period in records dating to 1977. The data cover 57 countries and regions classified using State Department data on alignment with US positions in key UN votes, and measure net purchases of Treasuries with original maturities above one year. The figures include official and private investors and may reflect custodial locations rather than ultimate owners. Overseas investors held $7.85 trillion of US Treasuries as of August, near a record high, but their share of the overall Treasury market has fallen from a 52% peak in 2012 to less than one-third. Private investors including hedge funds, banks and mutual funds now hold about 70% of US federal debt, near the highest level since 1990. The benchmark US 10-year Treasury yield had broken above 5% this year and was around 5.01% during Wednesday's Asian session. Rising Japanese domestic yields and diversification of reserve investments have increased alternatives for overseas investors, while US financing increasingly relies on buyers described as more price-sensitive.