With the fog of uncertainty around U.S. \u200bPresident Donald Trump\u2019s tariffs suddenly thickening again, foreign investors\u2019 appetite for U.S. assets \u200cis under renewed scrutiny. Yet capital from overseas keeps flowing into U.S. markets at a record rate. So is the \u201cSell America\u201d trade overblown? Probably.<\/p>\n
Trump\u2019s controversial policies and erratic decision-making may dim the allure of U.S. assets, yet the hard numbers show that foreign capital inflows have risen, not fallen, \u2060during the volatile \u200bfirst year of his second administration.<\/p>\n
Treasury International Capital figures published last week showed that net foreign purchases of U.S. stocks and bonds in calendar year 2025 totaled a record US$1.55-trillion. That was up 30 per cent from the year before.<\/p>\n
Almost all of that came from private sector investors who more than doubled their purchases of equities from the year before to more than US$650-billion, a powerful tailwind \u200bthat pushed the S&P 500 and Nasdaq to all-time highs.<\/p>\n
Foreign private sector investors also bought \u200cover US$440-billion of U.S. Treasury notes and bonds last year, dwarfing the modest net sales by foreign official institutions. That was a bit less than in 2024, but still a hefty amount that punctures the argument that the world is unwilling to lend to Uncle Sam.<\/p>\n
Even claims about China dumping U.S. Treasuries \u2013 which seem accurate on first glance \u2013 are likely overstated. True, Beijing\u2019s official holdings fell US$76-billion last year to a 17-year low of US$683 billion. But that\u2019s \u200cbecause China is \u200binstead funneling vast quantities of foreign assets, \u200cincluding Treasuries, into its state banks, argues Brad Setser of the Council on Foreign Relations. <\/p>\n
These holdings, swollen by China\u2019s record US$1.2-trillion trade surplus \u200blast year, are potentially worth trillions of dollars, Setser reckons.<\/p>\n
Put all this activity \u2060together, add in the Federal Reserve\u2019s three rate cuts last year, and it is clear why Treasury yields, including on \u2060the ultra-long 30-year bond, fell last year, despite rising \u201cdebasement\u201d fears.<\/p>\n
If Treasuries performed relatively well against their global peers in 2025 and have continued to hold \u200btheir own over the past two months, the same cannot be said of U.S. stocks. They lagged behind their global peers last year and are already playing catch-up in 2026.<\/p>\n
This may seem counterintuitive given all the news about the U.S. artificial intelligence capex boom. A handful of U.S. tech giants are set to spend roughly US$650-billion on AI this year alone, which, all things being equal, should boost the U.S. economy and its tech-heavy markets.<\/p>\n
But the S&P 500 is \u2060flat in the year to date, and the Nasdaq is down 2.5 per cent. Meanwhile, the benchmark stock indexes in chipmaking hubs Taiwan and South Korea, where significant AI investment is flowing, are up 20 per cent and 40 per cent, respectively.<\/p>\n
Wall Street is also lagging the major European, UK and Japanese indices, which are up around 6 per cent, 8 per cent, and 12 per cent this year, respectively.<\/p>\n
So someone is selling America, but it appears to be U.S.-domiciled investors. They have pulled US$52-billion from U.S. equity products since the start of this year, the most in the first eight weeks of any \u2060year since at least 2010, according to LSEG\/Lipper data.<\/p>\n
For the rest of the \u200bworld, Wall Street\u2019s liquidity, historical returns, scale, dynamism and relative \u201csafety\u201d still make it an attractive place to be. Even if foreign investors are more nervous \u2060about their U.S. exposure than they used to be and more willing to hedge dollar risk, they remain reluctant to actively sell U.S. stocks.<\/p>\n
To be sure, there are reasons to doubt \u200cwhether last year\u2019s record pace of foreign inflows will be sustained. But as long as the U.S. runs a large balance of payments deficit – \u200blast year\u2019s trade deficit was a record US$1.24-trillion – capital from abroad will be required to plug the shortfall. Foreign investors, it seems, will not be selling America any time soon.<\/p>\n","protected":false},"excerpt":{"rendered":"With the fog of uncertainty around U.S. \u200bPresident Donald Trump\u2019s tariffs suddenly thickening again, foreign investors\u2019 appetite for…\n","protected":false},"author":2,"featured_media":496554,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[11],"tags":[901,888,902,879,877,903,45,49,48,876,895,896,891,878,875,46,549,295,894,887,914,880,881,893,889,890,884,904,885,909,910,912,907,911,905,908,882,898,899,714,897,906,865,61,900,892,886,883,913],"class_list":["post-496553","post","type-post","status-publish","format-standard","has-post-thumbnail","category-economy","tag-alberta","tag-arts-news","tag-bc","tag-breaking-news","tag-breaking-news-video","tag-british-columbia","tag-business","tag-ca","tag-canada","tag-canada-news","tag-canada-sports","tag-canada-sports-news","tag-canada-trafficcanada-weather","tag-canadian-breaking-news","tag-canadian-news","tag-economy","tag-education","tag-environment","tag-federal-government","tag-foreign-news","tag-globe-and-mail","tag-globe-and-mail-breaking-news","tag-globe-and-mail-canada-news","tag-government","tag-life-news","tag-lifestyle","tag-local-news","tag-manitoba","tag-national-news","tag-new-brunswick","tag-newfoundland-and-labrador","tag-northwest-territories","tag-nova-scotia","tag-nunavut","tag-ontario","tag-pei","tag-photos","tag-political-news","tag-political-opinion","tag-politics","tag-politics-news","tag-quebec","tag-sports-news","tag-technology","tag-travel","tag-trudeau","tag-us-news","tag-world-news","tag-yukon"],"_links":{"self":[{"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/posts\/496553","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/comments?post=496553"}],"version-history":[{"count":0,"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/posts\/496553\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/media\/496554"}],"wp:attachment":[{"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/media?parent=496553"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/categories?post=496553"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/tags?post=496553"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}