The stockpile of US Treasuries held at the New York Fed on behalf of foreign central banks has dropped to $2.78 trillion, the lowest level since August 2012 and down $130 billion in just two months. The weekly custody figures, tracked by Reuters, are the fastest read available on official-sector appetite for dollar assets, and this one is flashing a message the headline number understates.
Two readings coexist. Fed custody holdings do not include every reserve manager, since central banks can and do hold Treasuries through commercial custodians and offshore accounts, and a shift in custody can reflect where bonds sit rather than whether they were sold at all.
The evidence points both ways. Deutsche Bank strategists estimate that a $75 billion fall in custody holdings in the four weeks through March 19 pointed to roughly $60 billion of net central bank selling, some of the most aggressive ever recorded. The official Treasury International Capital figures, on the other hand, showed foreign central bank net sales last year of only $34 billion, barely 1% of their $3.5 trillion stash, and net purchases in January 2026 of $50.6 billion, the largest monthly official purchase in 13 years and the second largest ever. Both things can be true at once: central banks are trimming at the margin now, but the composition is shifting as much as the level.
Treasury Borrowing Advisory Committee data show foreign ownership of the Treasury market at 33%, down from a mid-pandemic plateau near 34%, with foreign central banks switching into gold and, in Japan’s case, spending dollar reserves outright to support the yen. Foreign ownership last sat at 32% in the fourth quarter of 2025, the lowest since 1997 on Morgan Stanley’s count, and that share had flatlined around 33-34% since the pandemic before the war pushed it lower.
Why the drop is happening now
The context is the Iran war and the market stress it has produced. Brent crude has traded at or above $100 for much of the autumn, US 10-year yields touched 5.34% this week, the highest since 2002 on the long end, and equity indexes slid two sessions running as fiscal worries stacked on top of energy inflation. Some reports indicate Middle East and emerging-market authorities have been raising cash to offset the hit from the war, which mechanically means selling the most liquid asset on their books, US Treasuries.
There is also a sign of reassurance inside the same number, for readers who look. Custody holdings peaked near $2.95 trillion in March and April this year, coinciding with the peak of the tariff turmoil, when reserve managers parked cash in the safest instrument available. The current slide follows both the war quarter and an unbroken run of central bank gold buying through 2026, with reserve managers treating bullion and, increasingly, short-dated bills as alternatives to the long bond.
The amount of U.S. Treasuries held at the New York Fed on behalf of global central banks has slumped to its lowest in over a decade, casting renewed doubt on foreign appetite for U.S. sovereign debt and other dollar-denominated assets.
Reuters rang the alarm on the series in its reserve column, published alongside the weekly custody data on the New York Fed site.
How a 14-year low happens in slow motion
The monthly data behind the weekly print tell a steady story. September figures from the Fed show the custody stockpile declining through most of 2026, from $2.95 trillion at the start of the year to $2.59 trillion by end-August, a drop of roughly $360 billion, of which only part reflects sales and the rest relocations. Bloomberg reported in September that foreign holdings of US Treasuries overall hit a nine-month low in July, led by declines in France and Canada, then Japan and China at the top of the list.
Foreign private-sector demand has picked up some of the official-sector slack. Households, money market funds and offshore ETFs have all grown their Treasury positions since 2023, and the dollar itself has strengthened through this custody decline rather than weakened, which argues that bond flows are not the whole story and probably not the critical one.
Stablecoins add a newer, smaller line. Issuers acquire short-dated Treasuries as their reserve base grows, an emerging demand source the Treasury Borrowing Advisory Committee now names in its official charging documents, though the amounts remain a rounding error next to the $9.25 trillion foreign total.
What would settle the argument
The next official TIC release, which lags custody by months, will show whether central banks actually sold during the March quarter or merely moved assets. Deutsche Bank and other houses expect confirmation of net selling, and the signs so far, weak foreign demand at recent Treasury auctions, falling bond prices, and news reports of emerging-market authorities raising cash, all point the same way.
Until then, watch two series. The weekly print from the New York Fed, and the monthly foreign official asset table the Fed publishes at its own website. If Treasury yields settle now that oil has pulled back below $101 and the Fed has digested its September rate rise, the custody number should stop bleeding. If it keeps falling through November, a structural shift in reserve managers away from dollars, into gold, moves from hypothesis toward fact, and the cost of funding the US deficit would have a new floor to reason about.