Technical Foul: Who Will Buy All the Bonds?
Zachary Griffiths, CFA - Head of IG & Macro Strategy, CreditSights
Pat Luby - Head of Municipal Strategy, CreditSights
Winnie Cisar - Global Head of Strategy, CreditSights
Kathleen Tang - Analyst, Strategy, CreditSights
Bryan Perez - Analyst, Credit Strategy, CreditSights
Luke Jensen - Analyst, Quantitative Strategy, CreditSights
17 September 2025
Insights into who will buy all the bonds and what that means for Treasury supply, corporate credit spreads, foreign demand, Fed/MMF backstops, and policy risk, including:
- Supply surge: Discover who will buy all the bonds as ~$11T in Treasuries and $2.5T in IG corporates arrive over five years—and why it matters now.
- Foreign bid risk: Understand why fading overseas demand is more likely to widen corporate spreads than push Treasury yields materially higher.
- Treasury backstops: See how Fed balance-sheet growth, MMFs’ T-bill appetite, and bank/dealer capacity could absorb looming Treasury supply.
- Insurance allocation shift: Learn how lifers and P&C insurers pivoting to private credit/structured products pressures demand for public corporates.
- Policy and geopolitics: Explore how tariffs and perceived institutional politicization may alter global USD fixed-income allocations and pricing.
Executive Summary
-
Foreign investors are key to the demand base for high-quality US fixed income, owning 34% of the Treasury market outstanding and 28% of the US corporates market outstanding.
-
Broad-based tariffs and the politicizing of core US financial and economic institutions such as the Fed and BLS are causing angst among foreign investors when considering how much exposure to USD assets is appropriate from a risk management perspective going forward.
- Over the next five years the markets may need to digest just shy of $11 trillion of Treasuries and $2.5 trillion of US corporates. With heavy supply on the horizon, particularly for Treasuries, we consider the implications of foreign investors stepping back from USD fixed income at a time when supply is likely to rise meaningfully.
The Trump administration has been moving fast and breaking things since taking the helm on January 20 (Trump 2.0 at 100 Days: Legal Perspectives (Part 1) and Trump 2.0 at 100 Days: Legal Perspectives (Part 2)). Two key aspects of the administration’s policy agenda have emerged that may negatively impact foreign demand for USD assets: tariffs and a weakening (i.e. politicizing) of US institutional credibility, specifically the Fed (Cooked Up Controversy?: Fed Litigation Begins). Since April, clients outside the US have consistently asked about the path of the US budget deficit, whether Trump will fire Powell and what it all means for Treasuries (US Strategy: Asia Travelogue and Global Strategy: Notes From the Road (June 2025)). These questions highlight the beginning of a broader shift in global investors’ perception of risk for USD assets. So far, we find that investors are concerned, but not reallocating away from USD fixed income…yet. In this piece we consider over a longer-term (5y) time frame what a reduction in foreign demand could mean for US Treasuries and corporates.
Fill out the below form to view the full article:
Please note that we can only respond to valid business email addresses and the interview is already available to clients.
Recently Published
Research
