US total net Treasury International Capital (TIC) flows fell to $44.9bn in December, down from $212bn in the previous month. The data tracks cross-border purchases and sales of US long-term securities and banking flows.
The December figure points to much lower net foreign demand for US assets versus the prior month. The report covers both private and official flows.
Foreign Appetite For Us Assets
We’re seeing a massive drop in foreign investment flows into the U.S., down to just $44.9 billion in December 2025 from the very strong $212 billion the month before. This is a significant signal of caution from global investors as we moved into 2026. This trend raises serious questions about the continued appeal of U.S. assets in the coming weeks.
This sharp decline in demand for U.S. assets puts direct downward pressure on the dollar. The U.S. Dollar Index (DXY) has already shown signs of weakness this year, failing to decisively break above the 104 level in late January and early February. We should consider buying put options on dollar-tracking ETFs like UUP to capitalize on a potential slide towards the 102 support level seen last fall.
With foreigners buying less of our government debt, U.S. Treasury yields may have to rise to attract domestic capital. We have already seen the 10-year Treasury yield climb from 3.9% to over 4.1% since the start of this year, a move that is likely linked to this waning demand. Buying put options on a long-term Treasury ETF like TLT is a direct trade for betting that this trend of rising yields will continue.
Volatility Hedging Considerations
This kind of capital flight can often precede a spike in stock market volatility. If we look back to the rate-hike cycle of 2022 and 2023, periods of reduced foreign inflows coincided with downturns in the S&P 500. A prudent move would be to purchase call options on the VIX index with March or April 2026 expiration dates as a hedge against a potential market correction.
