Investing.com - Most of the biggest holders of U.S. Treasuries in Asia are saying "no" to the "sell America" trade, according to Yardeni Research.
Questions have recently swirled around the persistence of this trade, which has featured many investors offloading government bonds and a weakening in the U.S. dollar.
In Asia, home to many of the largest central bank holders of U.S. Treasuries, a recent decision by Moody’s to slash its rating of U.S. credit has policymakers and investors "in a whirl", Yardeni said in a note to clients.
This week, the yield on the 30-year Treasury reached above levels notched after U.S. President Donald Trump first announced his sweeping tariff agenda in early April.
But Yardeni suggested that, aside from this jump in 30-year yields, the Moody’s downgrade did not seem to trigger global investors to "sell America".
Notably, a warning from Moody’s around the impact of a $36.2 trillion U.S. debt pile was "news to exactly no one" in Asia, nor was the ratings agency’s flagging of elevated U.S. interest payment ratios, Yardeni said.
"The Moody’s call is backwards-looking," Yardeni argued, adding that a "feel-good effect" over indications that Trump’s tariff push will not be as aggressive as initially feared has helped to "drown out" worries over an ongoing budget bill debate in Washington.
On Tuesday, Trump went to Capitol Hill to persuade Republican lawmakers to pass his "big, beautiful" bill, which some analysts have estimated could heap an extra $3 trillion to $5 trillion onto the U.S. government’s $36.2 trillion debt load. Large tax cuts proposed by Trump could also add to the supply of U.S. Treasury debt, exerting pressure on the bond market, analysts have said.
Still, Asian investors are buoyed by signs of resilience in the U.S. labor market, while a "short supply" of global currency alternatives to the U.S. dollar has supported demand for the greenback, Yardeni said.