Global investors are showing early signs of diversification away from U.S. Treasuries as worldwide debt levels climbed to a record $353 trillion by the end of March of 2026, according to a new report from the Institute of International Finance (IIF) published on 6 May.
The report said international demand for Japanese and European government bonds has strengthened in recent months, while demand for U.S. Treasuries has remained broadly stable.
“This highlights that there are some efforts by international investors diversifying away from U.S. Treasuries,” said Emre Tiftik, Director at the Institutue for International Finance (IIF) for Global Markets and Policy, during a webinar discussing the findings.
The IIF said there is no immediate risk to the roughly $30 trillion U.S. Treasury market, but warned that long-term trends point to rising fiscal pressures in the United States.
Record debt levels
The IIF’s quarterly Global Debt Monitor found that global debt rose by more than $4.4 trillion in the first quarter of 2026, marking the fastest increase since mid-2025 and the fifth consecutive quarterly rise.
Much of the increase was driven by U.S. government borrowing, while China also saw a sharp rise in debt among non-financial corporate borrowers, particularly state-owned firms.
Outside the world’s two largest economies, debt levels in advanced markets edged slightly lower, while emerging markets excluding China recorded a modest rise to a record $36.8 trillion.
The report said global debt stood at around 305% of world economic output, broadly stable since 2023, but with diverging trends between advanced and emerging economies.
Debt ratios in mature markets have been gradually declining, while emerging economies continue to see steady increases.
The IIF warned that structural pressures are likely to push both government and corporate debt higher over the medium to long term.
Among those they listed ageing populations, higher defence spending, energy security needs, cybersecurity investment and artificial intelligence-related capital expenditure.
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