China is one of several nations trimming their exposure to US debt, as inflation drives Treasury yields to levels not seen since 2007
3-MIN READ3-MINSylvia MaPublished: 10:00pm, 19 May 2026With new data suggesting a global retreat from US Treasuries in March – the first full month of the US-Israel war on Iran – market worries are on the rise over whether the sell-off could deepen, as interest rate decisions under new Federal Reserve chair Kevin Warsh, US debt sustainability and prolonged Middle East tensions raise investor concerns.Analysts are currently weighing mounting inflation pressures – which have driven Treasury yields sharply and placed the 30-year yield at its highest level since 2007 – against the US dollar and the Treasury market’s unmatched liquidity, as well as the lack of obvious alternative destinations for global capital flows.
Japan, the largest foreign holder, shaved down its stockpile by US$47.7 billion in March to US$1.192 trillion.
In contrast, the second-largest holder, Britain, increased its holdings to US$926.9 billion from US$897.3 billion in February. The Cayman Islands and Ireland also saw small increases.
Ding Shuang, chief economist for Greater China and North Asia at Standard Chartered, said that mounting concerns over US debt sustainability and geopolitical risks have fuelled a clear desire for alternative safe assets, while cautioning against expectations for a rapid, massive shift.
