The World Still Loves the American Economy
The New York Times recently claimed that “The World Economy Is Becoming Wary of the U.S.”
This headline appears to hold President Trump responsible, asserting that “America’s position of global economic stability is starting to look shakier as the Trump administration piles on debt and doubles down on sanctions.”
The article suggests that “Global investors are balking at U.S. bonds,” and there’s growing concern over the dollar’s diminishing strength, with foreign governments even withdrawing their gold from U.S. vaults.
This seems alarming at first, but it’s important to look deeper at what the money is actually doing. A lot of the supposed exodus from America seems to be more about buying other American assets, adapting to U.S. trade policies, or realizing that there really isn’t a solid alternative to the dollar.
America Remains Global Capital’s Favorite Destination
Regarding the claim that capital is “starting to seek alternative destinations,” it’s hard to be polite about this—because the Times is quite simply mistaken. New Treasury data indicates that foreigners acquired a net $1.75 trillion of long-term American securities over the year leading up to July. That’s actually an increase from $1.47 trillion from the previous year. Even more telling, that amount is over double the approximately $799 billion bought during July 2024, the last year of Biden’s term.
If we break down these foreign purchases, it’s clear this isn’t a narrative of investors searching for “alternative destinations” away from the U.S. Instead, it’s about the global community aligning with the Trump administration’s push toward reprivatizing the economy. Over the 12 months ending July 2024, foreigners sold a net $151.5 billion in American stocks but bought $540.7 billion in Treasury notes and bonds, along with $306 billion in corporate bonds and $103.4 billion in agency bonds. Here, global investors seemed to lose confidence in U.S. equities while the Biden administration encouraged foreign purchases of government debt instead.
In the subsequent year, the trend shifted; foreigners became net buyers of $598.1 billion in stocks, $456 billion in Treasury notes and bonds, $341.1 billion in corporate bonds, and $73.4 billion in agency bonds. By the year ending July 2026, stock purchases soared to $941.9 billion while corporate bond purchases hit $452 billion. Meanwhile, Treasury purchases dipped to $246.6 billion. This trend demonstrates that foreign interest is increasingly directed toward private-sector securities, reflecting well across all three timeframes.
Essentially, far from being reluctant, it appears that foreign investors are actively seeking out U.S. stocks and corporate bonds. It’s a tale of the world growing more enthusiastic about America, not hesitant.
Rising Treasury Yields Are a Sign of Confidence, Not Fear
Concerning Treasury yields: the recent rise of the 10-year Treasury yield above five percent has been portrayed by the New York Times as bad news, suggesting that it happened “as investors nervous about the mounting national debt demand a higher rate of return for buying Treasury bonds.”
Honestly, that interpretation seems way off. First, the timeline doesn’t add up. The current estimates for national debt don’t look much different from what they were earlier in the year, around the time when the 10-year yield was close to four percent. If anything, it seems puzzling why investors would suddenly become concerned about a debt forecast that’s been clear for a while now.
Moreover, the article misreads the basics of bond yields. In short to medium terms, rising Treasury yields usually indicate economic confidence, while drops might signal distress. After the financial crisis and the pandemic, yields plummeted for an extended period. What’s happening now seems more like a shift back to normal yields, not a sign of “nervous” investors.
It’s true that yields can rise if there’s a belief that higher debt might lead to inflation and cause the Fed to raise rates, but that’s not the current situation. If markets were truly worried about inflation concerns from excessive debts in Washington, we’d likely see those fears show up in inflation expectations. As of Tuesday, inflation-adjusted yields on the 10-year Treasury climbed to 2.62 percent, while expectations for inflation over the next decade hovered around 2.33 percent. Real yields are going up, while inflation expectations remain stable.
So, the most logical explanation for rising yields stems from growing optimism about economic growth and corporate profits. With America enjoying an investment boom, there are promising avenues for capital use, compelling Treasuries to provide more attractive returns to stay competitive. Investors appear to be adjusting their portfolios, taking on riskier assets like stocks and corporate bonds over Treasury securities. The Times even mentions the robust private investment in American markets along with a surge in artificial intelligence infrastructure, which contributes to the higher costs of capital. Investors are looking to finance exciting opportunities.
The Dollar’s Reserve Status Is Rock Solid
The Times also tries to raise alarms about central banks holding fewer Treasuries and dollars. This concern, however, doesn’t hold up under scrutiny. A review from the New York Fed indicates that the decrease in the dollar’s proportion of reserves is primarily linked to a handful of large holders. Among 62 countries with complete data from 2019 to 2023, active portfolio strategies have actually seen slight increases in dollar allocations. Describing this as a worldwide retreat from the dollar seems a bit exaggerated.
For the most part, it’s China and Russia pulling back on their dollar reserves. The drop from Russia is a clear result of sanctions related to its invasion of Ukraine, which have cut its access to global commerce and limited its dollar assets. As for China, its dollar holdings have largely stemmed from trade practices that produced significant surpluses. U.S. trade policies have pushed China to seek other markets for its surplus goods. Hence, this isn’t necessarily a rejection of the U.S. but rather an outcome of U.S. strategies.
Efforts by the Trump administration to reduce bilateral trade deficits naturally mean foreign governments have fewer surplus dollars to reinvest in Treasuries. The tariffs and trade discussions aimed at correcting these imbalances will, therefore, likely lead to less automatic accumulation of dollars by foreign officials. Rather than a sign of U.S. decline, this indicates that our policies are effective, with foreign central banks responding accordingly.
The Times also misreads Norway’s situation for comic effect. It stated that “with the United States’ long-term fiscal situation looking shaky, some countries are starting to wonder if America is a wise investment.” It cited Norway’s sovereign wealth fund, claiming they would decrease their Treasury holdings in search of better returns. However, that’s not quite accurate.
What actually happened was the Norwegian fund managers proposed substituting some Treasuries with American mortgage securities but maintaining their dollar exposure largely the same—staying around 52.9 percent of the bond benchmark. The adjustments involve changes within the dollar market. These mortgage securities are backed by government-sponsored entities like Fannie Mae and Freddie Mac, so they’re practically another form of Treasuries. The corporate bonds they might buy still reflect confidence in the U.S. economy. Norway isn’t aiming elsewhere for better returns; they’re just seeking more favorable options within American securities.
Gold vs. Euros and Yuan
The story surrounding gold also presents a conflicting narrative concerning the dollar’s challengers. Governments and central banks have been stockpiling gold, indicating that neither the yen, yuan, nor euro has stepped up as a serious alternative to the dollar. This fact actually underscores America’s financial standing: despite declines in dollar reserves, other countries are unable to find a credible currency to hold.
Furthermore, the Times’ assertion that gold has “overtaken” official Treasury holdings is due to a pricing effect. An ECB report comparing the two shows gold representing about 27 percent of official reserves versus Treasuries at about 22 percent when assessed at future market values from the end of 2025. The report clarifies that this shift primarily results from valuation changes; revert to gold’s price from late 2023, and Treasuries would rank higher at around 26 percent against gold and the euro at approximately 16 percent each. The increase in value is tied to a $5,000 gold price.
When Christine Lagarde, who leads the European Central Bank, proclaimed a “global euro moment” in 2025, one might wonder: really? At the time she spoke, the euro held a 20.3 percent share of official foreign exchange reserves, yet latest figures indicate it’s dropped to about 20.0 percent. It’s a bit hard to find evidence that such a moment actually transpired.
Stablecoins, which the Times posits as a novel means for adversaries to circumvent the American financial system, essentially extend the dollar’s reach. About 98 percent of stablecoins are dollar-denominated, meaning issuers must retain dollars, Treasuries, and similar secure U.S. assets. Rather than replacing the dollar, stablecoins amplify its influence.
King Dollar Remains on the Throne
Perhaps the most puzzling aspect of the Times report is its portrayal of the Treasury’s buyback program as a failure. The purpose behind liquidity buybacks is to provide investors with a consistent opportunity to sell off older, less actively traded securities. Treasury Secretary Scott Bessent clarified that the initiative is not quantitative easing and cannot dictate long bond pricing.
Yet, the Times insists that these buybacks were, in fact, an underhanded effort to manipulate the yield curve—ultimately claiming that this alleged secret initiative was a failure. In reality, the operation the Times labeled a failed intervention was merely a purchase of up to $6 billion in a market that undergoes about $1 trillion in transactions daily.
The New York Times seems to assume that Trump has stepped back from global economic leadership or that the rest of the world is staging a coup. But, honestly, that’s not the case at all. The dollar remains firmly in control.
