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DID US EXORBITANT PRIVILEGE IMPROVE IN 2025? 2026 has started with a new bout of discussion on foreign ownership of U.S. assets but Robin Brooks, senior fellow at the Brookings Institute, points out that remarkably in 2025 the United States’ ability to borrow more cheaply than peers actually improved. In a blog post over the weekend Brooks calculates the premium of the 10-year Treasury yield over the trade-weighted average of 10-year yields of a basket of developed market peers, swapped back into dollars using 10-year FX forwards.
In the past, especially around the global financial crisis, the U.S. enjoyed lower interest rates than its peers, perhaps due to greater liquidity and safety of U.S. Treasuries.
“However,” Brooks says, “this ‘convenience yield’ decayed over time, presumably as fiscal policy got more and more out of control. In the run-up to Trump 2.0, U.S. interest rates were consistently above foreign ones, so the U.S. was paying a risk premium.”
But, and this is the weird bit: “Counterintuitively, this premium faded in the course of 2025 and is currently near zero, the first time since COVID this has been the case.”
That’s a relative move, and clearly a few things are going on in those markets – Japanese yields have been rising rapidly, and German yields too are around the top of their recent range.
Brooks points out that if you compare the U.S. to Sweden or Switzerland, which, he says “are trading as the ultimate safe havens these days” the U.S. yield is still much higher.
And he has another reason to be sceptical of his own sums, noting that Trump risk premia are forming at the very long end of the U.S. curve, something he says can be seen if you look at 10-year 10-year forwards.
The problem is you can’t quite do the same calculation that far out, as everything becomes too illiquid. Maybe the U.S. exorbitant privilege is less secure further out the yield curve, he says.
(Alun John)
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The STOXX 600 index fell by 1.2% amid concerns over Greenland tariffs and a decline in U.S. futures. A discussion on U.S. foreign asset ownership has emerged, with Robin Brooks from the Brookings Institute noting that the U.S. ability to borrow cheaply improved in 2025. He highlights that the premium on U.S. Treasury yields over developed market peers has diminished, reaching near zero for the first time since COVID. However, he cautions about potential long-term risks related to U.S. yields compared to safe havens like Sweden and Switzerland.

LIVE MARKETS-Did US exorbitant privilege improve in 2025?