Despite trade tensions initiated by former U.S. President Donald Trump, European investors significantly increased their holdings of U.S. Treasuries between April and November last year. According to portfolio data tracked by Citi, Europe accounted for approximately 80% of foreign purchases of U.S. Treasuries during this period. This suggests a lack of interest in the so-called ‘Sell America’ trade, even amidst global market uncertainties.
Citi’s analysis, based on data released by the U.S. Treasury, reveals that since Trump’s announcement of sweeping tariffs in April, European entities acquired 240 billion euros (AU$408.63 billion) of the total 301 billion-euro increase in foreign holdings of U.S. Treasuries. The data also indicated that foreign holdings of U.S. Treasuries reached a record high in November. However, Citi analysts cautioned that the U.S. data may overstate European ownership, as the region houses major financial centres used by global market participants to trade and hold assets.
Concerns had arisen following Trump’s threats to raise tariffs on several European countries and criticism of the Federal Reserve, leading some analysts to speculate whether European investors might offload U.S. assets. However, Citi’s data suggests that, overall, European appetite for U.S. Treasuries remained strong during this period. Separately, data from the European Central Bank indicated a rise in monthly purchases of euro zone debt by foreign investors since April.
Citi analysts, led by Aman Bansal, noted that while there’s an increased global appetite for euro-area fixed income, it exists alongside strong inflows into U.S. Treasuries. They found no signs of significant European selling since the ‘Liberation Day’ tariffs were announced. Financial markets have since calmed after the tariff threats subsided.
