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Foreign investment in US securities hits record high

In May, foreign investors added $311.1 billion to U.S. securities, reversing previous outflows.

July 27, 2025 at 04:05 PM

US markets defy doomsayers as 'exceptionalism roars back'

Despite earlier warnings, US markets continue to attract foreign investment.

US markets show strength amid foreign investor confidence

In May, foreign investors invested a record $311.1 billion into U.S. securities, reversing an earlier outflow of $14.2 billion in April. This surge suggests that, despite predictions of a decline in U.S. market influence, the appetite for American assets remains strong. Robin Brooks, a senior fellow at the Brookings Institution, highlighted the unexpected resilience of U.S. markets as they recover from prior dips. Although the S&P 500 and Nasdaq indexes have regained their highs, the 10-year Treasury yields remain elevated compared to earlier levels, indicating ongoing market uncertainties.

Key Takeaways

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Foreign investors poured $311.1 billion into U.S. markets in May.

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This influx counters earlier fears of U.S. economic decline.

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The S&P 500 and Nasdaq have regained previous highs.

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10-year Treasury yields remain elevated despite stock market recovery.

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Tariffs set at higher rates continue to affect market perceptions.

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Concerns persist about the long-term impact of U.S. trade policies.

"Foreign investors plowed a net $311.1 billion into U.S. securities in May, a record high."

This data shows the strong interest despite prior fears about U.S. market vulnerability.

"The hurdle for the US to experience genuine capital flight is high and certainly wasn’t breached in April."

This statement emphasizes the resilience of U.S. investments regardless of market turbulence.

"So, we take comfort from the data that confirm that it is the bears on the outlook for a massive selloff… who might be delusional."

This reflects the optimism about the strength of U.S. assets amidst market criticisms.

"We remain structurally bearish on the dollar and expect U.S. term premia to keep rising."

This highlights ongoing concerns regarding U.S. economic strategies and their long-term implications.

The latest influx of foreign investment challenges the narrative surrounding the decline of U.S. economic dominance. As investors assess the market's performance, it appears that confidence in the U.S. remains strong. However, with rising yields and persistent tariffs, the future could present risks that may influence investor sentiment. The contrasting performance of U.S. markets against those in Europe and China demands attention. The potential for tariff negotiations to destabilize these gains adds a layer of complexity that could reshape the landscape further into the year.

Highlights

The resilience of U.S. markets surprises many.
Foreign investments challenge the decline narrative.
U.S. ‘exceptionalism’ is not done yet.
Confidence in U.S. assets remains surprisingly strong.

Concerns about U.S. exceptionalism amidst market fluctuations

While recent investor confidence is notable, the potential for rising tariffs and yields poses risks that could impact future investments. Analysts remain cautious, as trade negotiations are ongoing and could lead to further economic implications.

Investor confidence may face tests as trade negotiations unfold.

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us markets foreign investment economy stock market tariffs finance economics politics

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