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Do you know? U.S. bonds, the world's largest Treasury market, are playing a "takeover game".
In this game, there are players who quietly enter the game, there are players who exit in disgrace, and the most curious thing is, who will be the ultimate loser in this game? Don't worry, let's find out together.
Britain's and Japan's "Generosity"
Not long ago, China, a big buyer of U.S. bonds, began to sell off its U.S. bonds, which amounted to tens of billions of dollars.
While everyone was speculating about who would take over the US debt, Britain and Japan unexpectedly stepped forward.
It seems that these two countries have suddenly become interested in US bonds and are buying them in large quantities.
Britain, once an empire on which the sun never sets, is still a force to be reckoned with in the financial markets, although its economic power is much less than before.
This time, they seem to see some opportunity, or they are attracted by the high yield of US Treasuries, and they buy a large number of US bonds in one go.
And Japan, as a loyal ally of the United States, has also taken out its pockets without hesitation this time.
But is this "pick-up game" really that simple? What kind of secret is hidden behind it?
The Fed's "sell-off"
While the UK and Japan were busy taking over US bonds, the Fed quietly began their "sell-off".
You may not know that the Federal Reserve, as the central bank of the United States, is also a big seller of U.S. bonds.
They are selling a lot of U.S. bonds every month, and the amount of the sell-off is not small.
This makes one wonder what is going on with the frenzied buying of the UK and Japan on the one hand, and the continued sell-off by the Fed on the other? Could it be that the Fed knows some secrets that we don't know? Or are they preparing for the next financial crisis?
In fact, the Fed's sell-off is no secret.
They do this primarily to reduce their balance sheets, control inflation, and maintain the stability of financial markets.
But the question is, will their sell-off take a toll on the UK and Japan? Who will have the last laugh in this "pick-up game"?
The "secret weapon" of gold reserves
Speaking of Great Britain and Japan, we have to mention their gold reserves.
The United Kingdom, in particular, once had the richest gold reserves in the world, but now most of this gold has been transferred to the United States.
What's going on?
It turned out that during World War I and World War II, in order to pay for the huge war expenses, Britain had to issue a large number of national bonds and use gold to pay off these debts.
The United States, on the other hand, took the opportunity to sell large quantities of strategic materials to Britain and thus obtained more gold.
This change not only changed the ownership of gold reserves, but also symbolized the transfer of global financial hegemony.
Today, the UK no longer has enough gold to support its monetary creditworthiness and can only rely on holding enough US bonds to maintain the value of the pound.
This means that while the UK is buying US bonds, it is also taking huge risks.
In the event of turmoil in the US bond market, the UK economy will also be severely affected.
Japan's economic woes and U.S. debt purchases
Let's talk about Japan.
Japan's economy has been sluggish in recent years, with deflation and an aging population serious.
In order to stimulate the economy, the Japanese government had to adopt an accommodative monetary policy and buy a large number of US bonds.
However, this approach has not brought about a substantial improvement in the Japanese economy.
On the contrary, due to the continued depreciation of the yen, the Bank of Japan had to spend a lot of money to buy US bonds to stabilize the exchange rate.
This approach has undoubtedly increased Japan's economic burden and put it in a more passive position in this "pick-up game".
Why, then, is Japan insisting on buying U.S. bonds? What are the considerations behind this?
Perhaps, the Japanese government believes that by buying U.S. bonds, it can maintain good relations with the U.S. and gain more support in international affairs.
But in any case, there are huge risks associated with this approach.
Who will be the ultimate loser in the "pick up game"?
The UK, Japan and the US Federal Reserve are all playing an important role in this "pick-up game".
The United Kingdom and Japan, as big buyers of U.S. bonds, bear huge risks; As a big seller of U.S. bonds, the Fed's sell-off has also had a profound impact on the market.
However, who will be the ultimate loser in this game? Is it the UK and Japan that are the receivers? Or the Treasury market itself? Or are those ordinary investors who are caught up in it?
There is no definitive answer to this question.
But what is certain is that there will not be a real winner in this "pick up game".
Because in this game, everyone is playing for their own benefit, and the end result is likely to be a lose-lose situation.
Epilogue:
The turmoil in the U.S. bond market is not only related to the economic interests of the United States itself, but also affects the nerves of the global financial market.
In this "pick-up game", no one is immune.
Therefore, we need to always be vigilant against the risks in the US bond market and look at the buying and selling behavior of various countries rationally.
Only then will we be able to keep a clear head and make the right decisions in this game.
What are your thoughts on this? Welcome to leave a message in the comment area to discuss
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