Decline in Private Foreign Demand Could Deepen US Treasury Selloff

According to a Reuters analysis, a notable decline in demand for US Treasury bonds from private foreign investors could further intensify the ongoing selling pressure in the bond market. This signals that volatility and rising yields in the US debt market may persist. The reduction in private sector foreign purchases is adversely affecting the supply-demand balance, particularly for long-dated bonds. Analysts note that purchases by central banks and other official institutions have not fully filled this gap, leaving the market more fragile. Combined with shifts in global investors' risk appetite and uncertainties surrounding monetary policy expectations, the wave of selling in US Treasuries could exert additional pressure on the long end of the yield curve. This could lead to higher borrowing costs and tighter financial conditions. Market participants warn that if demand remains weak for upcoming Treasury auctions, the US government's borrowing costs could rise further. These developments may heighten risk perceptions in global financial markets and affect other asset classes as well. This is not investment advice.