- Central banks’ Treasury retreat remains limited despite market jitters
Concerns that global central banks are quietly retreating from US Treasuries are resurfacing, but the evidence suggests any selling so far has been modest and far from a structural shift. Recent data from the New York Federal Reserve show foreign-held Treasuries in custody falling to a 16-year low below $3tn, with estimates pointing to roughly $60bn in net selling over a four-week period in March.
At face value, the figures have fuelled speculation that geopolitical tensions, currency pressures and shifting reserve strategies are prompting central banks—particularly in emerging markets—to trim exposure to US government debt.
Yet a broader reading of the data tells a more nuanced story. Official Treasury International Capital (TIC) figures show that foreign investors were net buyers of US Treasuries in 2025, with a further $50.6bn in net purchases recorded in January 2026, the largest monthly inflow in more than a decade. The apparent contradiction highlights a key analytical challenge: different datasets capture different realities.
Fed custody data include holdings by sovereign wealth funds and are sensitive to valuation changes and asset transfers across jurisdictions. In contrast, TIC data track actual transactions, offering a clearer view of underlying demand.
Despite periodic outflows, global appetite for US debt remains robust. Total foreign holdings of Treasuries have continued to rise, reaching more than $9tn, even as their share of the overall market has declined to about 32% the lowest since the late 1990s. That shift reflects less a collapse in demand and more the rapid expansion of US government borrowing, which has diluted the relative share of foreign ownership.
Private sector investors have also stepped in to absorb supply, with nearly $1tn in purchases over 2024–2025, cushioning the impact of any central bank rebalancing. Where selling has occurred, it appears to be driven more by portfolio rebalancing and currency management than by a wholesale loss of confidence in US assets.
Some central banks have adjusted reserve allocations in response to exchange-rate pressures, while others have diversified incrementally into gold or alternative currencies. In certain cases, headline data may even understate exposure. For example, countries such as China are believed to be reallocating holdings through state-owned banks, masking the true scale of their Treasury positions.
For global markets, the distinction is critical. A sustained central bank exodus from Treasuries would likely trigger a sharp repricing of US yields, increase borrowing costs and tighten global financial conditions. But for now, the evidence points to a more contained dynamic one in which foreign demand is evolving, not collapsing.
Rising geopolitical fragmentation, persistent fiscal deficits in the US, and a gradual shift in reserve management strategies suggest that the era of automatic, price-insensitive central bank demand may be fading. For emerging markets like Ghana, the implications are indirect but significant: higher US yields if driven by reduced foreign demand could tighten global liquidity conditions, complicate external financing and put renewed pressure on currencies.
