The winds of change are blowing, and the global economy is struggling to grow.
Central banks around the world are like startled birds, hastily adjusting their strategies.
Once considered a safe haven, U.S. Treasuries are now a hot potato that everyone wants to avoid.
In this financial battlefield without smoke, a game of "hot potato" is quietly unfolding.
The drumbeats are not of joy but of risk and anxiety.
No one wants to be the last to hold the bag, watching helplessly as this ticking time bomb is passed to the next person, hoping the explosion doesn't come too soon.
From the Eastern Dragon to the Empire on which the sun never sets, former big buyers of U.S. Treasuries are gradually reducing their holdings, seeking safer havens.
Data doesn't lie; China's holdings have dropped from $1.3 trillion a decade ago to $780.2 billion today.
Japan's reduction is not as significant as China's, but it's enough to raise market alarm.
However, in stark contrast to the caution of the "old players," a group of "new faces" has entered the U.S. Treasury market.
They are none other than domestic U.S. investors.
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Pension funds, mutual funds, insurance companies, and even ordinary families and individuals are flocking to the U.S. Treasury market like moths to a flame, becoming the biggest "bag holders" of this hot potato.
What drives them to follow each other so closely?
Is it ignorance or is there more to the story?
The U.S. Treasury market is changing, and the former guests are leaving one after another.
New players are joining, but they can't hide the reality of the crisis.
Looking back, China and Japan, the two economic giants of East Asia, once dominated the U.S. Treasury market, and their holdings were once the key force to influence the direction of the U.S. Treasury market.
A decade ago, China, with $1.3 trillion in U.S. Treasuries, was the largest foreign holder of U.S. Treasuries.
As a long-standing ally of the United States, Japan has also long held the top position among foreign holders of U.S. Treasuries.
The support of these two "big spenders" is the cornerstone of the stability of the U.S. Treasury market.
However, nothing lasts forever.
With the profound changes in the global economic landscape and the adjustment of their own strategic interests, the attitudes of China and Japan have begun to change subtly.
China has been continuously reducing its holdings of U.S. Treasuries in recent years, and the logic behind it is self-evident: reducing dependence on U.S. dollar assets, enhancing economic autonomy, and risk resistance is an inevitable choice for China.
Although Japan maintains its alliance with the United States on the surface, it has to reduce its holdings of U.S. Treasuries to protect itself under the pressure of the depreciation of the yen.
The current dilemma: "The ducks know the warmth of the spring river first."
The global central banks are the most sensitive to financial risks, and their vigilance to the risks in the U.S. Treasury market is increasing day by day.
They are reducing their holdings of U.S. Treasuries and turning to safer havens such as gold.
China's move to sell U.S. Treasuries is not only to optimize the structure of its foreign exchange reserves but also to send a signal to the world: the era of excessive dependence on U.S. dollar assets is over.
Japan and the United Kingdom are also following suit, joining the ranks of those selling U.S. Treasuries.
The fifth-largest bank in Japan, Norinchukin Bank, plans to sell more than 10 trillion yen of U.S. Treasury bonds and European bonds, which undoubtedly has brought a huge impact to the market.
The United Kingdom sold $17.9 billion of U.S. Treasuries in June, also indicating that its confidence in the U.S. Treasury market is declining.
Unexpected "bag holders": Just when global investors are avoiding the U.S. Treasury market, a group of "bag holders" has quietly emerged.
According to Goldman Sachs data, domestic U.S. investors have become the largest buyers of newly issued U.S. Treasuries, accounting for 73%, with a holding ratio of more than 9%.
The emergence of these "contrarian" has brought a glimmer of hope to the stormy U.S. Treasury market, but it has also raised concerns: are they really "bottom fishing," or are they "taking risks for gains?"
High interest rates are one of the main reasons attracting domestic investors to the U.S. Treasury market.
Against the backdrop of the current global economic downturn and generally low yields, the 5% yield on U.S. Treasuries is particularly attractive, and for investors pursuing stable returns, U.S. Treasuries undoubtedly have great appeal.
On the other hand, although the credit of U.S. Treasuries has been questioned a lot in recent years, to a large extent, it is still considered one of the safest assets in the world.
For ordinary investors with little investment experience and low risk tolerance, the "safety" of U.S. Treasuries gives them a psychological comfort.
However, can the entry of these "new players" really save the stormy U.S. Treasury market?
The "sword of Damocles" of U.S. Treasuries is hanging over the global financial market.
Will it land smoothly, or will it collapse with destructive force?
The answer may be hidden behind those seemingly prosperous numbers.
The risk of domestic investors "taking over": The influx of domestic U.S. investors has temporarily relieved the pressure on the U.S. Treasury market, but it is more like a "stimulant" that can only treat the symptoms, not the root cause.
Although the rise in U.S. Treasury interest rates has brought short-term returns, high inflation is like an invisible black hand, devouring the actual returns of investors.
What's more worrying is that the U.S. economy is not without worries.
Once the economy declines or the fiscal deficit worsens, the credit rating of U.S. Treasuries may be downgraded, leading to a sharp drop in bond prices, and holders will face huge capital losses.
For institutional investors such as pension funds and insurance companies, holding a large amount of U.S. Treasuries is to meet their long-term liability needs, and the sharp fluctuations in U.S. Treasury prices are a fatal blow to them.
For ordinary investors with little investment experience, blindly following the trend to "bottom fish" in U.S. Treasuries may end up with a total loss.
The risk of the U.S. Treasury scale getting out of control: $35 trillion, this is an astronomical number, representing the huge debt borne by the U.S. government, and also indicating potential systemic risks.
What's more terrifying is that this debt is still growing at an alarming rate, and interest expenses are like a bottomless pit, devouring more and more fiscal revenue.
The political struggle between the two parties in the United States has complicated the problem.
The differences between the two parties on fiscal policy make it even more difficult to solve the debt problem.
The farce of the debt ceiling has been played over and over again, pushing the U.S. government to the brink of default, and also causing the confidence of global investors in U.S. Treasuries to continue to decline.
The systemic risk of the global economy: Unlike the 2008 subprime crisis, which was mainly concentrated in the real estate market and financial derivatives, the current U.S. Treasury problem occurs in a highly globalized and interconnected economic system.
Any change may trigger a chain reaction, dragging the global economy into the abyss.
As the core asset of the global financial system, the fluctuations in U.S. Treasuries have a far-reaching impact on the global financial market.
Once the U.S. Treasury market experiences sharp fluctuations, it will trigger turmoil in the global capital market, and emerging market countries will bear the brunt, facing risks such as capital outflows and exchange rate depreciation.
The recovery of the global economy will also be severely damaged.
Faced with the approaching U.S. Treasury crisis, a series of doubts linger in people's minds and cannot be dispelled.
Can domestic U.S. investors continue to "take over" to fill the gap in the demand for U.S. Treasuries?
Can the temptation of high interest rates offset investors' concerns about risks?
When the risk premium of U.S. Treasuries can no longer compensate for its potential risks, will these "new players" continue to be generous?
How will the U.S. government deal with the ever-expanding debt scale and interest expenses?
Is it to continue to quench thirst with poison, relying on issuing more government bonds to maintain operations?
Or is it to make a painful decision, adopt a tight fiscal policy, cut spending, and control the debt scale?
Will the U.S. Treasury crisis become the fuse to trigger a global financial crisis?
The "gray rhino" of the U.S. Treasury crisis is approaching, and is the global economy ready to cope with the impact?
These questions have no simple answers.
The global economic pattern is changing, and U.S. Treasuries, once considered a "safe asset," have now become a synonym for risk.
For governments and investors of various countries, it is time to re-examine their investment strategies, reduce dependence on U.S. dollar assets, and seek a diversified investment portfolio to stand invincible in the future storm.
While selling U.S. Treasuries, China should accelerate the internationalization of the renminbi, enhance its own economic resilience and risk resistance, and contribute to building a more stable and fair new international financial order while safeguarding its own interests.
The U.S. Treasury crisis is a common challenge faced by the global economy, requiring countries to work together, strengthen cooperation, and jointly maintain international financial stability.
Only in this way can we avoid the tragedy of "passing the buck" from happening again and escort the healthy development of the global economy.