Aniket PujariInvestors abroad sold longer term Treasuries for three consecutive months, a sign of central bankers reducing their reliance on the U.S. as a financial buffer.
In January, foreign residents sold a net $13.3 billion of U.S. notes and bonds that had more than one year to maturity, the latest Treasury data show. It comes after $49.69 billion was sold in December, following sales of $34.41 billion in the month of U.S. elections, November. Global central banks represent a big chunk of foreign demand.
Before the back-to-back net selling of the world’s safest debt, foreigners had kept buying for 15 straight months.
The largest net seller in January was Canada. The U.K. was the largest buyer in January, after having been the largest net seller in December. Norway and Japan were the second and third largest net buyers in January, respectively, Goldman said in a note.
The rationale for selling can be explained in two ways: Threat of sanctions, freezing of foreign assets, and tariffs work because the role U.S. and its currency plays in the financial machinery. Central banks working to shield their own economy from any potential U.S. punitive action in the future could be reducing their use of dollars. To buy Treasuries, central banks exchange their own currency for dollars. To sell, they do the reverse.
Conversely, central banks across the world have been consistently buying gold, replacing one safe haven asset for another. This so-called act of de-dollarization isn’t new, but has taken a life of its own after the U.S. froze Russian assets. Central banks added 1,045 tons to global gold reserves in 2024, exceeding 1,000 tons for the third straight year.
The switch-over to gold is “a potential concern I’m hearing discussed more often in the last couple months,” Phillip Wool, chief research officer and portfolio manager at Rayliant Global Advisors, tells Barron’s. “I think that’s going to be more of a long-term trend, and depends on whether the U.S. continues exploiting the dollar’s reserve status as a geopolitical tool.”
Another reason could be just a routine realignment of debt. Though the dollar is down in 2025, the dollar’s value rose by 4.2% from November to January. When rates are high and the dollar is strong, global central banks often sell Treasuries. That limits the depreciation of their local currency while avoiding the higher costs of hedging their currency against the dollar.
Foreign demand for Treasuries is being watched by Wall Street because a more prolonged drop in net sales could remove a line of support for the U.S. It could also mean the de-dollarization efforts have taken stronger hold, although it would take a lot more than the selling of U.S. Treasuries to make a measurable dent; 88% of foreign exchange transactions use the dollar.
Add to that, the foreign holdings of all U.S. Securities—short and long—has stayed the same in January and December, at $8.53 trillion. It ticked only slightly lower from November’s $8.63 trillion. That’s because the net selling gets reported at market value not face value and the changes in market values can offset the monthly selling, said a Treasury spokesperson.
Its called valuation effects; the existing Treasuries holdings move not only because of net purchases or sales but also because interest rates move up and down, Deutsche Bank’s U.S. Head of Rates Research, Matthew Raskin tells Barron’s.
All this cushions the blow somewhat, but it can’t make investors turn a blind eye to foreign central banks pulling back from Treasuries.
