The United States has spent decades relying on foreign governments to buy its debt with relatively little concern about the price. That era may be fading, potentially making it more expensive and more volatile for Washington to finance a federal debt load that has now reached $40 trillion.
Foreign central banks, finance ministries and sovereign wealth funds once represented one of the most dependable groups of buyers in the U.S. Treasury market. But their importance has fallen dramatically, a shift that is becoming harder to ignore as long-term Treasury yields rise and investors demand greater compensation for lending money to the federal government.
