Forget China, Federal Reserve Is Biggest Seller Of US Debt—By $1.5 Trillion, Even As Foreign Holdings Remain Stable

Benzinga

The Fed has sold $1.5T in Treasuries since 2022—more than all foreign holders combined—as part of quantitative tightening. Analyst Otavio Costa warns the move could leave a lasting demand gap and push the U.S. toward financial repression.

Transcript

00:00It's Benzinga, bringing Wall Street to Main Street.

00:02Federal Reserve has sold about $1.5 trillion in U.S. Treasury since May 2022.

00:07More than all foreign holders combined, according to Benzinga.

00:10That massive drawdown reflects the Fed's quantitative tightening strategy,

00:14aiming to shrink its balance sheet and fight inflation.

00:16Data from Crestcat Capital's Octavia Costa shows foreign holders like China, Japan,

00:22Germany, and Canada maintain relatively steady holdings, while the Fed's portfolio plunged.

00:27Costa warns the shift may create a structural demand gap in the Treasury market.

00:31He argues that the U.S. may eventually need to re-engage as a primary buyer.

00:35He also suggests this trend tilts the country toward full financial repression.

00:40With the government channels capital inward, a quantitative tightening may end.

00:44Costa insists it does not itself overall Treasury demand structurally.

00:48For all things money, visit Benzinga.com.

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