Foreign Investors Now Favor US Stocks Over Treasuries for the First Time Since the 2008 Crisis, Deutsche Bank Says

New data show a pullback from US Treasuries that is broader and older than any single week's flows. This shift has been building for months, and the numbers behind it are now coming into sharper focus.

The Rotation, By the Numbers

George Saravelos, global head of FX research at Deutsche Bank, said in a note that "for the first time ever outside of the GFC, equity inflows into the U.S. have overtaken fixed income," according to CNBC. Deutsche Bank's analysis found the share of Treasuries held by overseas investors has fallen from more than 50% at its peak to about 30% today, while foreign holdings of US stocks have climbed. The US drew a record $600 billion in net foreign equity inflows in the year to March 2026, according to Deutsche Bank data cited by CNBC.

Saravelos framed the split bluntly: "the American private balance sheet is booming — AI, record profit margins — but the public sector balance sheet keeps worsening (6%+ deficits until the eye can see)."

Highlighting the pivot, BlackRock is currently overweight US equities — citing strong corporate earnings fueled by the AI buildout and a favorable macro backdrop — and underweight long US Treasuries. "Long-duration bonds... are a less reliable portfolio diversifier in the new regime," BlackRock wrote in a note cited by CNBC.

The fiscal backdrop is real. The national debt topped $40 trillion last month, and the Congressional Budget Office projects a federal deficit of roughly $2.1 trillion for the fiscal year ending September 30, 2026, more than 6% of GDP, according to CNBC.

Norway and China Are Already Moving

Norges Bank Investment Management, which runs Norway's $2.3 trillion Government Pension Fund, has proposed cutting government bonds to 50% of its fixed-income portfolio from 70%, according to Bloomberg. Treasuries would take the biggest hit under that plan, implying roughly a $75 billion reduction in Treasury holdings. CNBC reported the more specific breakdown: the fund's Treasury share of its bond portfolio would fall from about 34.1% to 21.9% if the proposal is adopted.

China's retreat has been quieter but steady. Beijing held $633.4 billion in Treasuries as of June, down from $731.4 billion a year earlier, CNBC reported.

Yields Are Spiking Everywhere, Not Just in the US

The US 10-year Treasury yield climbed to its highest level since November 2023 this past week, with the 30-year also moving sharply higher, according to CNBC. But the selloff wasn't confined to American debt. Japan's 10-year yield touched 3% for the first time since 1996, the UK's 10-year hit its highest level since 2008, and Germany's 10-year bund yield reached its highest since 2011, according to BigGo Finance.

Mohamed El-Erian, Allianz's chief economic advisor, told CNBC at the Ambrosetti Forum in Cernobbio, Italy, that yields will keep facing upward pressure because "I don't see the appetite for immediate fiscal consolidation in the U.S." He named the UK, Japan, and France as the G7 countries most exposed to a sovereign debt shock, and said France has replaced Italy as the focal point of Europe's bond stress. El-Erian also flagged that hedge fund exposure to the Treasury market has grown to roughly $4 trillion, concentrated among the top 50 funds, calling that concentration a potential source of systemic risk.

A Seeking Alpha analysis added a structural wrinkle on the Japan side: rising Japanese government bond yields are making it more rational for Japanese investors to keep capital at home rather than fund Treasury purchases abroad. The piece argued the real danger isn't a sudden Japanese dump of Treasuries, but a slow, structural decline in the foreign bond-buying that helped keep global borrowing costs low for years.

Bessent's Buyback Bet Shows Modest Early Signs

Treasury Secretary Scott Bessent's plan to at least double buybacks of longer-dated government debt hadn't actually started when the announcement was made, but the announcement itself has already moved markets. Since the announcement, the gap between the 30-year Treasury yield and comparable interest-rate swap rates has narrowed to its smallest since February, a move Bloomberg News first reported and Breitbart cited as evidence the program is easing liquidity strain rather than capping yields outright.

Bank of America's rates strategists told clients the clearer trade is the narrowing swap spread, not a broad bet that long rates will fall. The bank estimated the buyback expansion could eventually add about 6 basis points of support to the 10-year yield if sustained through 2028, but only around 1 basis point of effect through the end of this year, according to Breitbart. Treasury has set no yield ceiling and made no unlimited buying commitment, distinguishing the program from yield-curve control.

A reasonable skeptic could look at those numbers and ask whether a policy netting one basis point this year is worth the headlines it's generating. The program's defenders would say that's the point: it's a liquidity fix for illiquid off-the-run bonds, not a rate-suppression tool, and shouldn't be judged by its effect on the headline 10-year yield.

The Domestic Paradox

While foreign money pours into US stocks, domestic investors have been doing the opposite. US-domiciled investors pulled $75 billion from domestic equity funds over a recent six-month stretch, and US equity funds saw $52 billion in outflows in the first eight weeks of 2026 alone, the largest start to any year since at least 2010, according to Reuters figures cited by webpronews. Bank of America strategist Michael Hartnett's fund-manager survey found US stocks now draw just $26 of every $100 flowing into global equity funds, down from a 2022 peak of $92, with fund managers running a net 22% underweight on US equities.

Norway's board has not yet voted on the Norges Bank proposal, and Treasury's expanded buybacks had not yet begun purchasing bonds as of the announcement. Whether either move meaningfully changes the trajectory of a 10-year yield sitting at its highest level since November 2023 is still an open question heading into the fiscal year-end on September 30.