The US Treasuries collapsed? 10-year U.S. Treasury hit a new low!

China has begun to reduce its holdings of U.S. debt again.

We can't be blamed for this, it's all done by the United States itself.

On August 15, data released by the US Treasury Department showed that China reduced its holdings by another 11.3 billion US dollars in June.

Now the position is only 835.4 billion US dollars, compared with the high level has reduced the position of more than 400 billion.

In fact, we are not the only ones who are reducing our holdings. The yield on the 10-year Treasury note has been soaring recently, breaking through 4.3% in the past two days.

It has reached its highest level since 2008.

As we explained earlier, the interest rate of bonds is inversely proportional to the price.

So in other words, U.S. Treasury prices have fallen to their lowest level since '08.

Currently, the US debt ceiling is $31.6 trillion, which is said to be a fairly small share.

In theory, China's reduction in holdings will not have a substantial impact on U.S. bonds.

However, with China's current influence, it will still cause relatively large emotional disturbances.

Therefore, the United States has quite a headache to reduce its holdings in China and has been asking us to increase its holdings.

You think, the federal government has to use money everywhere, and it depends on constantly issuing debt.

And the government can continue to issue debt, relying on the indestructible national credit of the United States.

However, the number one creditor of the year was unwilling to borrow anymore, isn't this a slap in the face of the United States?

But we can't really be blamed for that.

I see that many people say that China deliberately reduced its holdings in order to embarrass the United States.

And you see that as soon as we reduce our holdings, there will be a rush over there, right?

So doing so can also increase the chips of the game.

This consideration may also make sense, but I think it may not be entirely true.

Because in fact, the national credit of the United States is indeed declining.

Originally, everyone just tacitly announced this matter.

However, some time ago, Fitch, one of the three major international rating agencies, officially downgraded the US credit rating, and this layer of window paper was broken.

No matter how much the US authorities speak out against it, it will not change this established fact.

The decline in credit in the United States is purely of their own making.

An obvious event is that after the outbreak of the Russian-Ukrainian conflict, about half of the foreign exchange reserves of the Russian Central Bank were directly frozen by the United States.

This approach, no matter what banner you are fighting, is self-destructive credit on the surface, and there is nothing to say.

There is another, less obvious.

It is the United States that keeps raising the debt ceiling.

Since 1939, the U.S. debt ceiling has been raised hundreds of times.

From $45 billion to $31.6 trillion now, almost 700 times.

The total debt is now 124% of GDP.

So what did the United States do with the borrowed money?

I went to give red envelopes to the people.

During the mask period, the Biden administration sent out cash red envelopes totaling 2.1 trillion.

We used to say that Americans like to borrow money, but in fact, the leverage ratio of American households has now fallen to more than 70%.

The leverage ratio of enterprises is similar. However, the federal government's leverage ratio soared to more than 110%.

This means that the U.S. government has been using its sovereign credit to borrow money from the world on behalf of residents and businesses.

The credit of residents and businesses is, of course, not comparable to the state.

Therefore, Fitch's downgrade of the US rating is actually a true reflection of the current credit of US bonds.

In addition, China's reduction of US debt is also out of its own considerations.

The Federal Reserve's continuous interest rate hikes have led to tension in the global exchange rate market and continuous depreciation of the renminbi.

And we ourselves are on the interest rate cutting channel.

Therefore, the RMB will continue to come under pressure for some time to come.

But it doesn't matter, as long as the scale of our foreign exchange reserves is still the largest in the world, we have enough confidence to support the exchange rate.

So, what we need now more is dollar cash than U.S. debt.

Another reason is that China and the United States used to be the largest trading partners of each other, and the foreign exchange we earn the most every year is the US dollar.

But now, thanks to various U.S. trade barriers.

Our first and second largest trading partners are ASEAN and the EU, and the money we make is much more complicated.

The share of the dollar is not so high, and the demand for US bonds itself has declined.

So in general, the United States has been draining its own credit over the years, building trade barriers, and raising interest rates rapidly for more than a year.

The combination of various reasons has caused the current situation of the continuous decline of US debt.

It's purely their own doing, and it has nothing to do with us.