Banking giant ING has just issued a serious warning about the future of the BRICS and US debt markets.
The bank said the economic union was “quietly withdrawing” from the market as countries’ holdings of U.S. debt continued to decline.
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“…one persistent trend is the continued decline in Treasury holdings among the BRICS countries.
In October, they were China (down $11.8 billion), India (down $12 billion), and Brazil (down $5 billion). For the foreign civil service sector as a whole, foreign civil servants’ holdings of government bonds and bonds decreased by $22 billion, partially offset by a $14 billion increase in Treasury bill holdings. ”
While the decline is occurring among major BRICS countries, analysts at ING believe that India’s bond sales in particular are related to “geopolitical factors” as well as efforts to support the rupee.
The bank has said so far that private companies are picking up much of the surplus as BRICS countries sell their exposure.
“…This year has shown that the private sector has plenty of appetite to buy U.S. Treasuries, and our call for a weaker dollar in 2026 is based on foreign investors increasing their hedging ratios rather than selling U.S. assets outright.”
On the dollar’s strength, ING said the dollar was showing “remarkable resilience” after newly released CPI data surprised analysts with lower-than-expected year-on-year inflation.
“The numbers seemed too good to be true, and that may have prevented a big reaction in the foreign exchange and interest rate markets. In fact, the two-year Treasury yield ended yesterday’s session unchanged for the day. However, the data leaves open the idea that the Fed will cut rates in 2026, with the market now expecting one rate cut of 25 basis points by April and another by September.”
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