Good morning. Developed economies have become increasingly dependent on bond markets to fund government spending, and the composition of those investor bases has changed significantly over time.

In the UK, the government was long able to rely on domestic financial institutions to absorb the bulk of gilt issuance. Investors such as insurance companies and pension funds acted as structural buyers of long-term gilts, which they held to maturity to match the long-term nature of their liabilities. However, their retreat from the market due to demographic and regulatory changes has increased the role of foreign investors, who may be more price-sensitive and quicker to sell when returns elsewhere look more attractive.

The US story is different. Treasury ownership has long reflected the global economic cycle and the dollar’s role as the world’s safe asset. After the global financial crisis, foreign holdings of US government debt hit 57 per cent. By the end of 2025, that share had fallen to 32 per cent. 

Japan, on the other hand, has never been able to develop a large base of foreign investors in government bonds. But nor has it really had to. Domestic savings, banks, insurers, pension funds and, later, the Bank of Japan’s vast unconventional monetary policy experiments absorbed a huge share of government debt supply.

France may be the one to watch. It has exceeded EU debt and deficit limits for years, yet a strikingly high share of its debt — 57 per cent at the end of 2025 — is still held by non-resident investors. It also benefits from the implicit backing of the European Central Bank, which many investors assume would step in during a bond market crisis. The 2027 presidential election may test that assumption.

<img width='1' height='1' style='display:none;border-style:none;' alt=' src='https://images.passendo.com/t/2/56508/james.eagle@eeagli.com/5227206314093605/0/0'><img width='1' height='1' style='display:none;border-style:none;' alt=' src='https://images.passendo.com/extt/2/56508/james.eagle@eeagli.com/5227206314093605?pid=1'><img width='1' height='1' style='display:none;border-style:none;' alt=' src='https://images.passendo.com/extt/2/56508/james.eagle@eeagli.com/5227206314093605?pid=2'><img width='1' height='1' style='display:none;border-style:none;' alt=' src='https://images.passendo.com/extt/2/56508/james.eagle@eeagli.com/5227206314093605?pid=3'><img width='1' height='1' style='display:none;border-style:none;' alt=' src='https://images.passendo.com/extt/2/56508/james.eagle@eeagli.com/5227206314093605?pid=4'>

Katie: The AI bust

Daire: Preserving heritage architecture

Hakyung: “Middle age is upon me”