If there’s one thing that has caught the attention of Trump’s second administration, it’s the way foreign investors are behaving with U.S. assets. Perhaps most notable is their stance on the safe haven asset of U.S. Treasuries.
Last month, a Deutsche Bank analyst said foreign investors might use their holdings of U.S. borrowings and stocks to counter White House threats to Greenland’s sovereignty, a move that angered Finance Minister Scott Bessant. While Bessant dismissed the “irrelevance” of Denmark’s holdings of U.S. debt, Trump eased his tariff rhetoric after bond markets struggled.
The Trump administration is therefore unlikely to be satisfied with reports this week that Chinese banks are being urged to limit their holdings of U.S. Treasuries. Bloomberg reported this morning, citing unnamed sources, that Chinese regulators have advised financial institutions not to hold large amounts of U.S. government bonds due to volatility and safety concerns.
Responding to the Bloomberg report, UBS’s Paul Donovan noted this morning that it was important to note that foreign investors were advised to reconsider their strategies. He said the report “does not include official holdings of U.S. Treasuries, and Chinese banks are not major players in the U.S. Treasury market. Still, the idea that international investors may be less willing to buy U.S. Treasuries in the future (without selling off existing holdings) is gaining market attention.” (China is the third-largest holder of U.S. Treasuries.)
Indeed, any uneasiness in China would only raise broader questions about whether investors should hedge against the negative impact of the dollar. As Chris Turner, ING’s head of global markets, wrote this morning: “China and Hong Kong held a combined $938 billion in U.S. Treasuries as of November last year. Such comments come at a fragile time for the U.S. dollar, when dollar diversification themes are prevalent.”
China is unlikely to do the damage to U.S. bond markets that other countries could theoretically do. For example, Japan holds nearly twice as much government debt as China, and Britain also has about $888 billion in U.S. borrowings.
But this morning’s report does reflect a trend that has emerged among the BRIC countries (Brazil, Russia, India, China) during Trump’s second term as president: selling or rolling over U.S. debt. The latest data from the U.S. Treasury Department in November 2025 show that holdings in these countries are generally on a downward trend.
