MENA Newswire, NEW YORK, December 30, 2025: Former U.S. Treasury official Geng Ngarmboonanant has cautioned that Americans should be increasingly concerned not only about the country’s rising national debt but also about the shifting composition of those who hold it. In an opinion piece published by the media, Ngarmboonanant, who is now a managing director at JPMorgan Chase & Co. and previously served as deputy chief of staff to Treasury Secretary Janet Yellen, outlined how changes in the profile of U.S. debt holders are affecting borrowing costs and financial stability. Ngarmboonanant said that as the national debt exceeds 38 trillion dollars, the nature of those financing it has changed significantly over the past decade. Foreign governments, once the largest and most stable holders of U.S. Treasury securities, now account for less than 15 percent of the market, compared with more than 40 percent in the early 2010s.
The reduction reflects a broader shift in global capital flows, with fewer central banks and sovereign wealth funds purchasing U.S. government debt than in previous decades. At the same time, the Federal Reserve has been reducing its holdings of Treasury securities. The central bank has trimmed its balance sheet by roughly 1.5 trillion dollars in recent years, part of its ongoing effort to tighten monetary policy after years of large-scale asset purchases. This has removed a major buyer from the Treasury market, leaving private investors to absorb much of the new issuance. According to Ngarmboonanant, the increasing reliance on private investors has altered the dynamics of the debt market. Institutional investors such as asset managers, insurance companies, and pension funds now play a greater role in purchasing Treasuries, while hedge funds have more than doubled their presence over the past decade.
These developments have been associated with higher yields and more volatile market movements, which in turn influence interest rates across the broader economy. The impact of these changes is visible in consumer and corporate borrowing costs. Treasury yields serve as the benchmark for a wide range of loans, including mortgages, student loans, and business financing. As yields have risen, borrowing costs for households and companies have followed suit. The increase in rates has contributed to tighter financial conditions and higher debt servicing costs across multiple sectors. Ngarmboonanant also pointed out that the federal government’s interest payments on its debt have now surpassed national defense spending. The Congressional Budget Office has reported that interest expenses are among the fastest-growing components of the federal budget, reflecting both the size of the debt and the higher rates paid on newly issued securities.
Foreign ownership of treasuries continues to decline
This marks a significant fiscal milestone, as interest costs have become one of the largest single categories of federal expenditure. The shift in debt ownership has implications for the stability and functioning of the U.S. Treasury market. Treasuries have long been viewed as the world’s safest and most liquid assets, forming the backbone of the global financial system. The reduction in official foreign holdings and the growing presence of market-driven investors mean that the behavior of Treasury prices and yields may be more sensitive to changes in investor sentiment and market conditions than in previous periods. The Treasury Department continues to issue large volumes of debt to finance government operations, refinance maturing obligations, and meet interest payments. The composition of buyers determines how easily and cheaply this financing can be achieved. Stable, long-term holders such as central banks traditionally provided a steady source of demand.
By contrast, private investors typically seek higher returns and may adjust their portfolios more quickly in response to market changes. Ngarmboonanant’s remarks come at a time when policymakers and economists are paying close attention to the sustainability of U.S. fiscal policy. The combination of record-high borrowing levels and higher interest rates has increased the cost of maintaining the national debt. Data from the Treasury Department shows that the United States is on pace to spend over one trillion dollars annually on interest payments alone if current trends continue. The Treasury market remains central to global finance, influencing everything from currency exchange rates to capital flows into emerging markets. The evolving makeup of debt holders underscores the interconnectedness of global financial systems and the potential for shifts in one market to affect many others.
Decline in foreign demand alters financing structure
As the United States enters another fiscal year with rising borrowing requirements, the composition of its debt holders continues to draw scrutiny from analysts and investors. The declining role of foreign governments, reduced Federal Reserve holdings, and expanded participation by private investors together represent a structural change in how the U.S. finances its obligations, a shift that will continue to shape the nation’s economic landscape in the years ahead. The implications of this transformation extend beyond debt management, influencing interest rate policy, fiscal flexibility, and investor confidence. Economists note that sustained reliance on market-driven investors could make government financing more sensitive to changes in market sentiment and global liquidity. This evolving ownership pattern underscores the increasing importance of maintaining fiscal discipline to preserve stability and trust in U.S. credit markets.