Text|Far Mountain
Editor|Multifish
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The U.S. debt issue is now maintaining a high degree of heat, the reason I believe everyone has heard of it, the U.S. debt has reached the upper limit this year, although the relevant departments of the United States have reached a compromise, but discerning people can see that the risk of thunderstorming in the U.S. debt still exists.
At present, the market is very concerned about the attitude of major economies to US bonds, and whenever the Fed releases data, it will cause a wave of onlookers in the market.
Now I heard that the crisis has escalated! China continues to sell US bonds, and the four major bears have "raided" the United States! The US debt is not fragrant, what is going on?
According to relevant data released by the US Department of Finance, the holdings of US bonds in major economies around the world changed greatly in July, even reaching a record high.
However, it should be noted that not every economy now trusts U.S. debt, for example, the mainland is currently in a selling trend according to its own situation.
In July, mainland U.S. bond holdings were significantly decreasing, reaching $13.6 billion. The news also surprised many institutions, because China's US debt position has decreased by nearly $400 billion compared with the peak.
The current position is only $821.8 billion, but the current position remains the highest in the world.
For some scholars, they are now more concerned about why China is accelerating its selling of U.S. debt. Even some scholars believe that the ultimate goal of the relevant Chinese departments is to sell all their US debts?
As we all know, many economies around the world, including US allies, have been reducing their holdings of US debt, but in the July data, there has been a change, many countries are increasing their holdings of US debt, and even Japan's US debt position has increased.
The increase in U.S. debt positions in many economies around the world has a very important reason related to the Fed's policy at that time.
Because according to market analysis at that time, with the economic situation in the United States, the Fed may cancel interest rate hikes in the future.
From the perspective of self-interest, selling U.S. bonds at such an important time is harmful to their own interests, and even some economies directly increase their positions in order to seek more interests.
The US economic data has exceeded everyone's expectations, and an important interest rate hike logic of the Fed is based on the CPI index, but the current US data is still at a high level.
This also means that the inflation problem in the United States has not been curbed, and the Fed may still need to raise interest rates to curb inflation in the future.
At this time, market expectations have completely changed, which has a serious impact on the entire financial market. Some institutions began to predict that although the Fed will raise interest rates in the future, there is still a possibility of raising interest rates.
Let's take a look at why the mainland still chooses to reduce its holdings of U.S. bonds when many economies around the world increase their positions.
First, I have to admit that the current US bond yields are very attractive, and from a global perspective, US bond yields are relatively high. This also shows from the side that the current relevant departments of the US side are also well aware of the risks of US bonds, and can only stimulate everyone to buy US bonds by increasing yields.
Rising yields, in fact, have an adverse effect on U.S. bond prices and will reduce the value in disguise.
The amount of U.S. bonds held by the mainland is relatively high, and if the price of U.S. bonds continues to decrease, the mainland's losses will be relatively large. For economic reasons, choosing to sell U.S. bonds at this time is undoubtedly a very correct choice.
Second, the US debt issue cannot be viewed simply, and we must clearly consider the current Sino-US relationship. As we all know, China and the United States have been in a game in recent years, and due to the wrong China policy of the United States, the relationship between the two sides has fallen into a freezing point.
At the same time, after the Russian-Ukrainian conflict, the United States adopted a series of financial sanctions against Russia, including the harvesting of Russian assets overseas, which makes us put a question mark on the safety of US debt, and appropriate selling of US debt can reduce these risks.
Third, I don't know if you have paid attention to the economic situation of various countries around the world in recent years, and there is a wave that has to attract attention, and many economies, including the mainland, are implementing de-dollarization policies.
This is completely self-inflicted by the United States, which has begun to raise interest rates frantically since the epidemic, resulting in the economies of all countries around the world being affected to varying degrees. Discerning people can see that every time the Fed raises interest rates, it is harvesting the rest of the world.
Fourth, a very important reason for the mainland to reduce its holdings of US debt is to take into account the risk of US debt. In the first half of the year, the issue of the US debt ceiling attracted the attention of all parties, and even at that time, contradictions arose within the US side, and the two sides raised the ceiling through multiple rounds of negotiations.
The US side has raised the ceiling of US debt again and again, in fact, it is reducing the credibility of US debt again and again, and under this circumstance, it is not difficult to understand that the mainland has made a move to reduce its holdings.
The mainland's continued reduction of US debt holdings has also aroused great concern from the US side, and even they want to use public opinion to control the mainland's US debt position. It is claimed that the mainland's continued reduction of US debt will deal a major blow to the global economy.
In fact, discerning people can see that investing in U.S. bonds is completely a free act, before we can choose to buy U.S. bonds, now we can also choose to sell U.S. bonds, the United States has been advocating a free economy, but now it criticizes the mainland to sell U.S. bonds, which is completely a double-standard behavior.
What do you have to say about this? Welcome to leave your opinion in the comment area!