Banking giant ING just issued a major warning on BRICS and the future of the U.S. Treasury market.
The bank says the economic alliance is “quietly leaving” the market, as the nations’ holdings of U.S. Treasuries continue to move lower.
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“…One enduring trend is the continuing fall of Treasury holdings amongst the BRICS nations.
In October, these were China (-$11.8 billion), India (-$12 billion) and Brazil (-$5 billion). Across the foreign official sector, foreign official holdings of Treasury Bonds and Notes were off $22 billion, though partially offset by a $14 billion increase in T-bill holdings.”
Although the sell-off is happening among leading BRICS nations, ING analysts believe India’s Treasury sales in particular are related to efforts to support the rupee along with “geopolitical factors.”
So far, the bank says the private is picking up much of the slack as BRICS nations sell their exposure.
“…This year has shown that the private sector is more than willing to buy Treasuries and our call for a weaker dollar in 2026 is based on foreign investors increasing their hedge ratios on US assets rather than selling them outright.”
As for the strength of the dollar, ING says it’s proving “surprisingly resilient” after newly released CPI data surprised analysts with a lower than expected print on year-over-year inflation.
“It may be that the numbers seem too good to be true, which prevented a bigger reaction in FX and interest rate markets. In fact, two-year US Treasury yields ended yesterday’s session unchanged on the day. However, the data leaves the idea of Fed cuts in 2026 intact, with the market now anticipating one 25 basis point cut by April and another by September.”
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