The US is still an investors’ haven, but high Treasury yields are a concern

Throughout President Trump’s second term, stories have proliferated that his actions to hike tariffs, undermine the Western alliance and interfere with Fed decision making threaten the status of the U.S. as a safe haven for investors.   

These claims were made as the U.S. stock market underperformed international equity markets last year for the first time in several years. In comparison, European equities posted stellar returns, with the STOXX 50 index increasing by 19 percent in euro terms and 35 percent in U.S. dollar terms. The advance was fueled by perceptions that European stocks were cheap relative to the U.S. market and that NATO members were committed to boost defense spending significantly.

Heading into this year, European equities were expected to maintain their momentum in anticipation of improved Eurozone GDP growth. But European equities have lagged since the Iran conflict began, while U.S. stocks are setting record highs. Some observers question why this is happening when the Iran war is unpopular and U.S. inflation is rising.

To put this in perspective, one must first understand the current mix of foreign investments in the U.S. As of mid-2025, the Treasury Department reported the total value of U.S. stocks held by foreigners was nearly $20 trillion, or about 20 percent of the total U.S. stock market, whereas foreigners held $15.5 billion of U.S. bonds, or roughly 30 percent of the total U.S. debt outstanding.

The principal reason that U.S. stocks have overtaken U.S. bonds in foreign portfolios is that the value of U.S. equities has soared over time, whereas foreigners........

© The Hill