Something subtle, but significant, is happening beneath the surface of the U.S. financial landscape – foreigners are holding fewer Treasuries and more equities. To some, this might sound like a routine asset reshuffle, but it reflects a reassessment of how the world wants to be exposed to U.S. assets.
For decades, U.S. government bonds were the global comfort investment— liquid, safe, and, most importantly, apolitical. But that last part has started to fray. A combination of rising debt levels, repeated debt-ceiling standoffs, and the increasing use of financial sanctions has made even America's most holy asset feel a little less neutral.
