How much impact will the high-level sell-off of U.S. bonds have on the U.S. economy for seven consecutive months?
Observe. Things are getting worse and worse, and the summit made the right decision to sell US bonds for 7 months in a row!
According to the "2023 Global Capital Flows Report" released by the U.S. Treasury Department on the 19th, China's holdings of U.S. Treasury bonds decreased by $8.5 billion in October from the previous month, reducing positions for the seventh consecutive month, and the holdings fell to $769.6 billion, the lowest level this year, compared with $778.1 billion in the same period last year, and the holdings of U.S. bonds decreased by nearly 100 billion.
Speaking of which, you may wonder what is the purpose of the above-mentioned continuous sell-off of U.S. bonds?In the past two years, the international situation has changed rapidly, and if we continue to hold more U.S. debt, if something happens, the United States will retreat, and then the dollars in our hands will become waste paper.
The second reason is that the United States, which raised interest rates through the Federal Reserve a few years ago, is now on the verge of bankruptcy, so we have to sell Treasury bonds. The third reason is to optimize the investment structure, now the international financial environment is not what it used to be, we must look for new assets, not just focus on US bonds, to increase new assets such as the euro and **, to better avoid risks.
In general, the U.S. sell-off of U.S. bonds for 7 months is actually largely a risk-off mentality, because it doesn't want to be hit"Bondage"。So, how much impact will the continued sell-off of US bonds have on the United States?Internationally, China and Japan are the world's largest holders of U.S. bonds, but China and Japan have been selling off U.S. bonds in large quantities for some time, two years ago, but there is a similar trend of selling U.S. bonds in large quantities. The sell-off of U.S. bonds by China and Japan will inevitably affect investors' confidence in U.S. bonds, resulting in U.S. bonds
Of course, this is only one result. In fact, the total amount of U.S. debt held by China and Japan is not much compared to the total amount of U.S. debt. China's holdings of U.S. bonds account for only 24%, although Japan is more, but it only accounts for 32% for a total of 56%, so even if all U.S. bonds are sold off, the impact on the U.S. will not be significant.
And many people don't know that the United States is the world's largest debtor, with more than 70% of its debt in the United States. Families, individuals, enterprises, the three giants of the United States, Vanguard Pilot Investment Company, Fidelity Asset Management, and BlackRock hold 525.9 billion, 461.5 billion, and BlackRock respectively, and the United States alone holds more U.S. bonds than most overseas countries.
Seeing this, I think everyone knows that although China is selling US bonds, the US economy has not been greatly affected. However, this does not mean that the United States can rest easy. It can absorb U.S. debt, but it is risking its own country's future, because the interest rate on U.S. debt is too high, and when the U.S. economy can't keep up, the U.S. economy will be on the verge of collapse.
The reason why Evergrande suddenly exploded was because the company's income was not enough to repay the loan interest, which led to the company's capital chain breaking and soon stopping production.
Therefore, when the U.S. economy has problems, the U.S. debt crisis is the end of the U.S. economy. The United States still has a strong military and can continue to print money, and no one can say what will happen when the time comes.