US Rates Watch: Foreign demand faces more headwinds

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US Rates Watch: Foreign demand faces more headwinds

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US Rates Watch

Foreign demand faces more headwinds

More foreign selling pressures 12 July 2026

Positioning and flow data are sending mixed messages, but the balance has become

incrementally less supportive for USTs. Futures longs have moved back out of the Rates Research

United Statesmoney, reopening the risk of additional selling pressure, while CTA signals suggest scope

for fresh shorting across intermediate and long maturities. Meanwhile, active global

investors remain underweight USTs versus other regions, reinforcing the preference for MeghanRates StrategistSwiber, CFA

overseas bond exposure. BofAS

meghan.swiber@bofa.com

Demand-side trends are also leaning modestly bearish. Potential GPIF and Japanese Eleanor Xiao

Rates Strategist

pension reallocations toward domestic assets could trim future UST demand. The BofAS

continued decline in foreign official custodial holdings points to both intervention- eleanor.xiao@bofa.com

related liquidity building and a broader diversification away from USD assets. US Rates Research

BofAS

The main offset is stronger fund demand. Fixed income inflows accelerated notably vs See Team Page for List of Analysts

recent weeks, led by mixed-allocation and UST funds, helping absorb elevated bond

supply. Still, improving retail and institutional flows are being weighed against elevated

IG issuance, less supportive positioning, and softening foreign demand. This divergence CFTC: Commodities Futures Trading

is evidenced well in auction allocation (Exhibit 60 and Exhibit 61). Commission

This week's CPI and retail sales data will be the next tests for demand and positioning. CTA: Commodity Trading Adviser