August 19, 2025

QuickTakes

Foreign Investors Aren't Following

The Dollar-Is-Bad Script

By most accounts, almost everyone is bearish on the dollar. Nearly everyone is selling dollars to buy euros and gold, according to this widely held view. Global investors are rebalancing their equity portfolios out of US stocks into European stocks. The only problem with this narrative is that the monthly capital flows data collected by the Treasury International Capital System (TICS), which was updated on Friday, show that US foreign net capital inflows rose to a record-high $1.74 trillion in the 12 months through June.

It's hard to see any sign of the rebalancing of global equity portfolios in the latest TICS data. Over the past 12 months through June, US net capital inflows by private foreign investors rose to a whopping record of $653.6 billion (chart). A word of caution: The past four record highs in foreign inflows into US equities preceded the previous four bear markets.

In June alone, private foreigners purchased $116.5 billion of US equities (chart).

Foreigners are not too concerned about a debt crisis in the US. They continue to be significant buyers of US Treasury notes and bonds as well as US government agency bonds and domestic corporate bonds (chart).

Foreign investors own a record $9.1 trillion of US Treasuries (chart). Foreign official holdings have been flat around $4.0 trillion since 2012, while foreign private holdings of Treasuries have risen to a record $5.2 trillion.

The largest holders of US Treasuries are in Japan, the UK, and China (chart). China may also have some of its holdings parked in other financial centers.

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