What Changed? | This Week's Briefing: U.S. rates can look like a domestic story—growth, inflation, Fed cuts or not. But the marginal buyer is often offshore, and that buyer's decision is increasingly about hedged returns, not headline yields. | When currency hedging gets expensive, "foreign demand" can flip from a stabilizer to a source of tightening. The irony is that nothing has to change in Washington for financial conditions to shift—sometimes it's the FX swap market quietly doing the work. The BIS has been explicit that FX hedging mechanics, including the cross-currency basis, can move the effective cost of owning dollar assets for non-U.S. investors. | | A David Among Goliaths in the Lithium Gold Rush | | Energy giants like Exxon and Chevron have been buying up land in America's lithium hotspot. | Now they've got a new neighbor. | EnergyX just acquired 35,000 gross acres of high-grade lithium resources in Arkansas' Smackover Formation, right next to Exxon and Chevron's projects. | What's really turning heads about this move is that EnergyX isn't just competing for lithium-rich land. Their patented technology can recover up to 3X more lithium than traditional methods. That combination positions EnergyX to be one of the biggest lithium producers in America. Plus, General Motors has already invested along with other global leaders like Eni and POSCO. | Great timing too, because the demand for lithium is projected to 18X current production by 2040. | You can claim a stake in the lithium boom too. Join 40,000+ people as an early-stage EnergyX investor today. | *Disclaimer: This is a paid advertisement for EnergyX's Regulation A+ Offering. Please read the offering circular at invest.energyx.com. Under Regulation A+, a company has the ability to change its share price by up to 20%, without requalifying the offering with the SEC. | | The Numbers | The 10-year Treasury yield is around the mid-4% range in late January 2026 (4.24% on January 23). The Fed reports $2.77T in marketable U.S. Treasuries held in custody for foreign official and international accounts (week of January 21, 2026). Major foreign holders (November 2025): Japan ~$1.20T, U.K. ~$0.89T, China (mainland) ~$0.68T. Foreign holdings of Treasuries reached record highs in mid-2025 (around $9.16T in July 2025), even as the composition shifted away from China and toward Japan and U.K.-based custody channels.
| | Why It Matters | For a Tokyo life insurer or a euro-based asset manager, the "true" Treasury yield is the yield after hedging dollars back into home currency. That hedge is priced in FX forwards and swaps, and it embeds the interest-rate differential plus (or minus) the cross-currency basis. In plain terms: when U.S. short rates are high relative to home rates, hedging can eat most of the pickup. | That's why Treasury auctions, credit spreads, and even mortgage rates can be more sensitive to global plumbing than to a single U.S. data print. If hedged yields turn unattractive, foreign buyers don't need to "sell America" to tighten conditions—they can simply stop adding duration, shift into bills, or rotate into spread products where the hedged carry looks better. | The stabilizing version of this story is steady foreign sponsorship that dampens term premiums. The destabilizing version is a hedge-driven buyers' strike: demand becomes pro-cyclical, stepping back precisely when volatility rises. BIS research on recent episodes highlights how hedging demand and basis moves can interact with the dollar itself, reinforcing financial tightening even when the domestic narrative sounds unchanged. | | Takeaway | The cleanest way to read "foreign demand" is not the headline level of Treasury purchases, but the marginal economics of being hedged. When the FX swap market shifts, the buyer that sets the price can change—and U.S. markets tend to feel it before the story hits the front page. | — Lauren
Editor, American Ledger | Resources | U.S. Department of the Treasury (TIC), Nov 2025
https://ticdata.treasury.gov/resource-center/data-chart-center/tic/Documents/slt_table5.html | Board of Governors of the Federal Reserve System (H.4.1), Jan 2026
https://www.federalreserve.gov/releases/h41/current/ | Federal Reserve Bank of St. Louis (FRED DGS10), Jan 2026
https://fred.stlouisfed.org/series/DGS10 | Bank for International Settlements, May 2025
https://www.bis.org/publ/bisbull105.pdf | Reuters, Sep 2025
https://www.reuters.com/world/china/foreign-holdings-us-treasuries-surge-all-time-high-july-chinas-sink-2025-09-18/ |
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