Foreign investors now favor U.S. equities over Treasurys in what Deutsche Bank strategists call a historic reversal, with equity inflows into the U.S. overtaking fixed income inflows for the first time outside of the GFC. The share of U.S. Treasurys held by overseas investors has plummeted from over 50% at its peak to about 30%, while foreign ownership of U.S. equities has reached all-time highs. U.S. national debt topped $40 trillion last month, with the federal budget deficit projected to hit $2.1 trillion, representing more than 6% of U.S. GDP. The U.S. drew a record $600 billion in net equity inflows over the year to March 2026, outweighing government and agency bond investments by the largest margin in history. Major asset managers including BlackRock are now overweight U.S. equities and underweight long-duration Treasurys, citing booming corporate balance sheets driven by AI and record profit margins against deteriorating public sector finances.
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