This is a reason the Middle East’s major oil-producing countries have been selling their U.S. Treasurys

Group 1 - Major oil-producing countries in the Middle East have been reducing their holdings of U.S. government debt since the onset of the U.S.-Israel war against Iran on February 28, driven by a need for increased liquidity [1] - The financial market is experiencing a need for liquidity, evidenced by a decline in equities for five consecutive weeks, redemption demands in credit markets, and the use of credit-default swaps in corporate bonds to hedge risks associated with the Middle East conflict [2] - The U.S. Treasury market, valued at $30.6 trillion, is traditionally viewed as a safe haven during uncertain times; however, investors have been pulling back due to rising inflation risks, which were later overshadowed by concerns about an economic slowdown, leading to a rally in Treasurys and lower yields [3] Group 2 - Throughout March, inflation fears dominated the bond market, with ten-year and 30-year Treasury yields increasing by 47.8 basis points and 35 basis points, respectively, reaching their highest levels since mid-July of the previous year [4] - Custodial holdings, which serve as a proxy for foreign official demand, have decreased to their lowest levels since 2012, with a decline of $66 billion since the beginning of March, as reported by BofA strategists [5][4] - Middle East oil exporters, holding approximately 3.5% of total Treasurys owned by foreign investors (over $300 billion), are contributing to the decline in custodial holdings, with Saudi Arabia being a significant player in this context [5][6]