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28.10.2026 02:12 PM
US government debt no longer needed even by its closest allies

According to the latest data, even Washington's closest partners have stopped being a reliable source of funding for the US budget. Analysis based on Treasury and State Department data shows that countries and regions most politically aligned with the US at the United Nations bought just $174.3 billion of US Treasuries net over the first eight months of 2026. That is the lowest figure for this period since 2021 and a decline of more than 60% year?on?year.

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The shift is most pronounced in Asia. Japan, the largest foreign holder of Treasuries, bought only $389 million of securities — 99% less than a year earlier. South Korea sold $23.8 billion of Treasuries, a record for this period in data going back to 1977. Taiwan was also a net seller. There is no single reason, and governments have said little publicly about plans to abandon US debt; the data do not distinguish between public and private purchases.

Asian economies with large current?account surpluses traditionally converted excess dollars into US Treasuries. This year, weak local currencies have eroded their purchasing power, forcing governments to sell assets to defend exchange rates. At the same time, yields on domestic assets have risen, making foreign investments less attractive. Japanese investors alone are earning the highest domestic yields in decades, and the extra return from US papers has narrowed. Korean investors prefer stocks, and Taiwanese funds are flowing into stocks and deposits. In September the Bank of Korea said it would diversify part of its reserves away from US bonds.

Some of the gap is being filled by private investors, but they are far more price?sensitive and responsive to moves in the US For Treasury Secretary Scott Bessent and Fed Chair Kevin Warsh, this means the market could react sharply if investors lose confidence in monetary policy, the economy, rising deficits, or signals from the White House. That very sensitivity has already pushed 10?year yields above the 5% mark this year. US government debt has topped $40 trillion, and it is clear the US economy is now more dependent on buyers than before.

Countries less aligned with Washington saw the opposite shift. They bought $17.1 billion of Treasuries over the eight months, ending four consecutive years of net sales — though that is only about one?tenth of allies' purchases. China remains the largest net seller.

There is, however, no risk of buyers disappearing altogether. Foreign investors still hold $7.85 trillion of US bonds — near record levels — although their share of the market has fallen to under one?third from a 52% peak in 2012. The $32 trillion market remains unrivalled in depth and liquidity, and the dollar retains its role as the main reserve currency.

I believe today's Fed policy decision will carry extra weight precisely because of this shift. If Kevin Warsh gives markets reason to doubt the commitment to fighting inflation, private buyers would demand a higher premium and 10?year yields could quickly rise back to 5.1–5.2%, which would be an added burden for gold and equities. If the tone is clear and hawkish, the market should absorb supply without disruption. But structurally, I expect the risk premium on US debt to rise, meaning high yields are likely to stay with us for a long time.

Technical outlook for EUR/USD

Buyers now need to reclaim the 1.1140 level. Only then can they target a test of 1.1155. From there, an advance to 1.1180 is possible, but achieving that without support from major players will be difficult. On any pullback, I expect serious buying only around 1.1115. If no buyers appear there, it would be prudent to wait for a break of the 1.1090 low or consider opening long positions from 1.1050.

Technical outlook for GBP/USD

Pound buyers need to take the immediate resistance at 1.3300. Only then can they target 1.3330, above which further progress will be difficult. The farther target is the 1.3360 area. On a decline, bears will try to seize control at 1.3265. If they succeed, a range breakout would deal a serious blow to bullish positions and push GBP/USD toward a low of 1.3230 with a view to extending down to 1.3200.

Jakub Novak,
Especialista em análise na InstaForex
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