Taiwanese Investors Lead $11 Billion Outflow From U.S. Long-Term Government and Corporate Bonds in Q2 2025

Investors have been rapidly withdrawing funds from long-term U.S. bond markets, marking the fastest pace of outflows since the onset of the COVID-19 pandemic in 2020. Net outflows from long-dated U.S. government and corporate bond funds reached approximately $11 billion in the second quarter of 2025, representing the largest quarterly outflow in five years and the fourth-largest over the past 12 years.

Taiwanese investors, in particular, have been unloading their holdings in U.S.-focused exchange-traded bond funds at rates not seen since the pandemic began. This trend reflects growing investor concerns about the U.S. debt situation and has broader implications, including upward pressure on fixed mortgage rates in markets such as Australia. Additionally, U.S. equities have experienced the largest client outflows in 10 weeks, with small-cap stocks seeing their biggest outflow of the year in the last week, indicating a broader shift in investor sentiment away from U.S. financial assets.