Demand resilience exceeds expectations! Canada's significant increase in holdings has driven a rise in foreign investors' holdings of US Treasury bonds in May.

Despite concerns about the potential impact of Trump administration policies, overseas demand for US treasuries remains resilient. In May, the total amount of US treasuries held by foreign investors increased, with purchases from Canada seeing a significant surge as the main driving force. Data released by the US Treasury on Thursday shows that foreign investors held a total of $9.05 trillion in US treasuries in May, an increase of $32.4 billion from April. This nearly offset the decrease in April, bringing the total holdings to the second-highest level in history. The largest buyer in May was Canada - despite facing tariffs and border security pressures from the Trump administration, and even having the idea of being annexed by the US proposed. Canada purchased a net of approximately $65.8 billion in US treasuries in that month, increasing its overall holdings by $61.7 billion to a record $430 billion. Changes in US treasury holdings are influenced by both trading activities and valuation changes. The Bloomberg US Treasury Index fell in May, reflecting a rise in yields. The largest holder of US treasuries, Japan, slightly increased its holdings by $5 billion in May, bringing their total to $1.14 trillion. China reduced its holdings by $9 billion, down to $756.3 billion. The UK increased its holdings by $1.7 billion to $809.4 billion. Priya Misra, portfolio manager at JP Morgan Asset Management, stated, "Despite concerns about the deficit, the fundamental demand for US treasuries remains strong." "Foreign investors are still actively participating. In terms of market depth and liquidity, there is no asset that can replace US treasuries." Since the sell-off in the treasury market in early April, investors and economists have been paying increasing attention to US capital flows. The sell-off at that time was driven by concerns about President Trump's proposed highest tariff plan in a century. Currently, foreign funds and governments hold over 30% of US treasury stock.