Renowned economist Mohamed El-Erian has signaled a major structural shift in global finance as China's share of the U.S. Treasury market plummeted to a 15-year low, raising concerns over future demand for American debt.
Great Retreat
Data shared by El-Erian reveals that China's holdings of U.S. Treasuries now represent just 7% of the total market share—a staggering drop from the 28% peak recorded 15 years ago. The total holdings have fallen to approximately $682.6 billion, the lowest level since 2008.
“As illustrated in these MacroMicro charts, China's holdings of US Treasuries have continued to fall,” El-Erian noted in a post on X.
He emphasized that the decline is even more pronounced when viewed against the backdrop of a “steady issuance of new securities by the US government.”
As illustrated in these MacroMicro charts, China's holdings of US Treasuries have continued to fall. Given the steady issuance of new securities by the US government, China's share of total UST holdings has dropped even more — to 7%, a quarter of the 28% peak reached 15 years… pic.twitter.com/vagpQgsxuy
Based on the data from the Federal Reserve Bank of St. Louis, here are the percentage changes in 10-year Treasury yields as of Feb. 12, 2026. The current 10-year Treasury yield stands at 4.09%.
As the U.S. national debt approaches $39 trillion, Beijing has reportedly advised its domestic banks to limit their exposure to Treasury securities, pivoting instead toward gold and other hard assets. China's gold reserves have now risen for 15 consecutive months, reaching a record 2,308 tonnes.
Analysts suggest this de-risking is a direct response to the weaponization of the dollar, following the 2022 freezing of Russian assets.
By cutting its stake to “a quarter of the 28% peak,” China is signaling a permanent shift away from being the primary financier of American deficits.
Risks For The US Economy
The alarm sounded by El-Erian centers on who will absorb the massive supply of new debt as traditional “anchors” like China retreat.
While demand from Japan and the UK remains steady, the loss of China's massive buying power could lead to higher borrowing costs for the U.S. government.
If foreign demand continues to thin while the U.S. runs a trillion-dollar trade deficit, the resulting pressure on interest rates could threaten the delicate equilibrium of the global financial system.
Economist Peter Schiff said that China's move will mainly prompt the Federal Reserve to buy the bonds, creating inflationary conditions for consumers.
China has advised its banks to sell U.S. Treasuries. That is very good advice. Soon foreign governments and many private investors will be selling U.S. Treasuries. The main buyer will be the Fed, creating inflation that will send consumer prices soaring. https://t.co/GGNU9tT9EQ
As of Friday’s close, the Dow Jones index rose 2.31% year-to-date, whereas the S&P 500 was 0.33% lower and the Nasdaq Composite index was down 2.97% in 2026.
The SPDR S&P 500 ETF Trust(NYSE:SPY) and Invesco QQQ Trust ETF(NASDAQ:QQQ), which track the S&P 500 index and Nasdaq 100 index, respectively, closed higher on Friday. The SPY was up 0.07% at $681.75, while the QQQ declined 0.21% to $601.92.
Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.
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