Foreign investor holdings of Treasuries climbed in May, led by a surge in Canadian purchases, in a sign of resilient overseas demand for U.S. government securities in the face of concerns over effects from Trump administration policies.

Foreign holdings totaled US$9.05 trillion for May, up US$32.4 billion from April, Treasury Department figures showed Thursday. The rise almost fully reversed April’s decline, and left the stockpile at its second-highest level on record.

Canada — which has been subject to Trump tariffs as well as pressure over border security and

even becoming a part of the U.S.

— was the outstanding buyer in May, with some US$65.8 billion of net purchases of notes and bonds. That helped take its overall holdings of Treasuries up by US$61.7 billion to a record high of US$430 billion.

Holdings are affected by net sales or purchases along with shifts in valuation. The

Bloomberg U.S. Treasury index

dropped in May, as yields climbed. Japan, the biggest holder of Treasuries, saw a US$500 million rise in its holdings, to US$1.14 trillion, while China’s stockpile — now the third largest, behind the U.K. — dipped US$900 million to US$756.3 billion. Britain’s holdings increased US$1.7 billion, to US$809.4 billion.

“Underlying demand for Treasuries is robust despite concerns about the deficit,” Priya Misra, a portfolio manager at JPMorgan Investment Management, said before Thursday’s release, referring to the outsize US budget gap. “Foreign investors are continuing to participate. There is no alternative for the depth and liquidity of the Treasury market.”

Investors and economists have boosted their scrutiny of U.S. capital flows since the selloff of Treasuries in early April that was triggered by concerns about

U.S. President Donald Trump

’s plan for the highest tariff rates in more than a century. Overseas funds and governments hold over 30 per cent of U.S. Treasuries outstanding.

Treasury Secretary Scott Bessent has regularly assured that foreign demand for American securities remains solid, and April’s report showed that holdings stayed near the record reached in March.

Belgium, whose holdings include Chinese custodial accounts according to market analysts, saw its stockpile go up by US$4.5 billion, to US$415.5 billion.

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Holdings of the Cayman Islands — viewed as a popular domicile for leveraged investors such as hedge funds — dropped by US$7 billion in May, to US$441.3 billion.

Bloomberg.com