The Moody’s downgrade is unlikely to change foreign demand for Treasuries significantly in the absence of a government shutdown. A more material impact will come from where tariff rates settle and by how much this reduces the US’s trade deficit.
Treasury TIC data released on Friday shows that foreign demand for Treasuries has remained steady. The data is lagging, going up only until March, but shows that overseas Treasury demand remained fairly even, rising about $230 billion from February to March versus an increase of $340 billion in the prior month.
