Goldman Sachs says demand for US government bonds from foreign officials has been dragged down by a stronger US dollar during the Iran war.

Goldman Sachs said that the US dollar strengthened in the first month of the US-Iran conflict, prompting foreign official institutions to sell US Treasuries. Isabella Rosenberg, a strategist at Goldman Sachs, wrote in a report on Wednesday that the US dollar is "one of the most significant driving factors for foreign official demand for US Treasuries after valuation adjustments." The size of foreign-held US Treasuries fell from a record high in March, while the US dollar index rose by 2.4%, marking the largest monthly increase since July. Rosenberg pointed out that these changes appear to have occurred as some foreign governments focus on supporting their domestic currency and easing capital outflows during times of war. She noted that this is likely a temporary pattern and does not indicate a structural shift in demand for US Treasuries.