Since the outbreak of the U.S.-Iran conflict on February 28, foreign central banks have sold U.S. Treasuries for five consecutive weeks, with cumulative sales exceeding $90 billion according to Federal Reserve data. Holdings at the New York Fed are now at their lowest level since 2012, and the proportion held by foreign investors has dropped to 32.4%, the lowest since 1997. The selling is being driven primarily by oil-importing economies including Turkey, India, and Thailand, liquidating reserves to secure dollars to pay for energy imports and prevent currency depreciation. Japan’s Finance Minister has also signaled Tokyo could sell Treasuries to stabilize the yen, which has weakened to around 160 per dollar. Separately, SEC Form 4 filings show a rise in insider selling at major U.S. corporations including NVIDIA, Broadcom, Palantir, and Diamondback Energy. While the two trends have different causes, both reflect growing caution in financial markets. Charles Schwab, BNY strategist Geoff Yu, and BCA Research’s chief geopolitical strategist Matt Gertken have all warned that markets remain highly sensitive to ceasefire headlines, and that a breakdown in negotiations could trigger renewed selling across Treasuries, equities, and commodities. The ceasefire expires Wednesday.
Sources: Financial Times · Federal Reserve Data · Council on Foreign Relations · SEC Form 4 Filings · Charles Schwab · BNY · BCA Research · Fortune · CNBC
