Core Viewpoint - The article analyzes the potential risks associated with foreign countries selling U.S. Treasury bonds (T-bonds) in response to tariffs, emphasizing that such actions are unlikely to lead to a significant increase in T-bond yields due to various structural factors in the market [2][26]. Group 1: U.S. Treasury Bond Structure - The maturity structure of U.S. Treasury bonds is categorized into short-term (under 1 year), medium-term (1-10 years), and long-term (over 10 years), with short-term bonds accounting for 21.5%, medium-term for 51.8%, and long-term for 17.2% as of March 2025 [4]. - In terms of issuance, over 80% of new T-bonds issued in 2023 have been short-term, reflecting the government's strategy to manage debt costs based on interest rate conditions [4]. Group 2: Investor Composition - As of December 2024, foreign investors, including foreign institutions and central banks, hold 33.0% of U.S. Treasury bonds, followed by mutual funds at 19.3%, the Federal Reserve at 14.7%, individual investors at 10.3%, and banks at 8.6% [6]. - Among foreign investors, central banks account for approximately 43%, with Japan, the UK, and China being the largest holders [6]. Group 3: Maturity Distribution and Repayment Pressure - The maturity distribution indicates that due to anticipated interest rate cuts by the Federal Reserve, the highest volume of T-bonds maturing will occur in the next 2-3 months, with a total maturity of $12 trillion from January to May 2023, compared to $11.5 trillion in the same period last year [12]. - The U.S. government primarily rolls over maturing debt, but high debt levels and interest rates could create repayment pressures, with net interest payments projected to reach 3.1% of GDP in 2024, nearing historical highs [15]. Group 4: Trading Volume and Foreign Selling Review - Since the Federal Reserve's interest rate hikes in 2022, the average daily trading volume of T-bonds has increased significantly, reaching $1.36 trillion, although the turnover rate has not increased proportionately [17]. - Historical analysis shows that while China has reduced its T-bond holdings from a peak of $1.3 trillion to under $800 billion by March 2025, Japan has experienced periods of reduction but overall maintains a rising trend in T-bond holdings [23][24]. Group 5: Conclusion on Foreign Selling Impact - The article concludes that foreign selling of U.S. Treasury bonds is unlikely to cause significant yield increases due to the large market size, the limited speed of potential selling, and the historical resilience of T-bond yields to foreign selling actions [26]. - Key factors include the improbability of a prolonged government shutdown due to debt ceiling issues, the active trading environment of T-bonds, and the limited alternatives for foreign reserves [27].

Macro Analysis - The risk of foreign countries selling U.S. Treasuries is a concern, especially in light of recent tariff announcements by Trump, but the actual impact may be limited due to the scale of the U.S. Treasury market[1] - The total outstanding U.S. Treasuries and daily trading volume are significantly larger than the holdings of any single foreign country, indicating that no single nation can manipulate the market[1] - Historical data shows that foreign selling has less impact on Treasury yields compared to fundamental variables[1] Treasury Structure - As of March 2025, the maturity structure of U.S. Treasuries is as follows: short-term (1 year or less) at 21.5%, medium-term (1-10 years) at 51.8%, and long-term (over 10 years) at 17.2%[2] - Foreign investors hold 33.0% of U.S. Treasuries, with the largest holders being Japan (12.5%), the UK (8.6%), and China (8.5%) as of March 2025[2] Maturity and Repayment Pressure - The total maturity of U.S. Treasuries reached $12 trillion from January to May 2025, compared to $11.5 trillion in the same period last year, indicating a rolling peak in maturity pressure[3] - The U.S. government is currently at its statutory debt ceiling, limiting new issuances until Congress acts, which could increase future maturity pressure if the ceiling is raised[3] Trading Volume and Foreign Selling - The average daily trading volume of U.S. Treasuries reached $1.36 trillion as of April 2025, exceeding the holdings of any single foreign country, such as Japan, which holds approximately $1.13 trillion[6] - Historical trends show that reductions in foreign holdings, such as China's decrease from $1.3 trillion in 2015 to under $800 billion by March 2025, have not led to significant deviations in Treasury yields from fundamental trends[7] Conclusion on Foreign Selling Impact - If tariffs lead to foreign countries reducing their Treasury holdings, it is unlikely to cause sustained increases in Treasury yields due to several factors, including the vast size of the Treasury market and limited alternative reserve assets[8] - A coordinated and aggressive sell-off by multiple countries could pose a significant risk to the Treasury market and global financial stability, but this scenario is considered less likely[8]