Three-month net purchases approach zero: Foreign investors’ enthusiasm for U.S. stocks has fallen to the lowest level since the tariff dispute.

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Foreign investors’ enthusiasm for U.S. assets is quietly receding.

Bloomberg macro strategist Simon White points out that on the surface, the U.S. still maintains robust capital inflows, but the overseas funds that truly support U.S. stocks and bonds are clearly weakening, which may become one of the most noteworthy risks for the market in the future.

The latest data released by the U.S. Treasury Department shows that in March, U.S. net capital inflows were about $150 billion, higher than the three- and six-month averages of around $100 billion. But this improvement is mainly due to capital returning as American investors sell overseas bonds, rather than overseas investors actively increasing their holdings of U.S. assets.

What’s even more worthy of attention is that the core pillar of capital inflows is loosening. Calculated on a three-month rolling basis, the scale of net foreign purchases of U.S. stocks is nearly zero, falling to the lowest level since last year’s “tariff panic.”

This means that beneath the surface resilience of U.S. assets, the support from overseas funds is weakening. If foreign investors continue to cut their allocations to U.S. stocks and bonds, the high valuation of U.S. stocks and the financing ability of the bond market will come under greater pressure.

Hidden Risks Beneath Surface Prosperity: The Robustness of Foreign Capital Flows into the U.S. is Weakening

The demand from foreign capital for U.S. equities and bonds is weakening simultaneously, and the model depending on overseas funds faces turning-point risk.

According to U.S. Treasury TIC data, in March, the volume of foreign investors buying U.S. stocks and U.S. investors selling overseas stocks was basically the same, resulting in near-zero net capital inflow under the stock category. This means that the continuous inflows of overseas funds into the U.S. stock market over the past several years are slowing significantly—in the past, trillions of U.S. dollars flowed into the U.S. through the stock channel, in part because the safe-haven appeal of U.S. bonds weakened, making stocks the main channel for foreign capital to allocate dollar assets.

At the same time, foreign demand for the U.S. debt market is also sluggish. The net rolling three-month purchase is only about $50 billion, with buyers highly concentrated among European investors. However, as the U.S. adopts a tougher policy stance toward Europe, the willingness of Europeans to continuously increase their holdings of U.S. bonds is uncertain.

Currently, foreign investors still hold about 30% of the outstanding U.S. Treasury stock. Against a backdrop where inflation pressures have pushed yields higher, if foreign demand further weakens, it could amplify the pressure for yields to rise and push up the U.S. government’s financing costs.

Simon White summarizes that aggregate numbers mask a trend of weakening robustness in capital inflows. For the U.S. market, which relies on foreign capital support, this structural inflection point is worth close attention.

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