In late March, the Fed raised interest rates by 25 basis points on the dollar, as is customary.
Fed Chairman Jerome Powell once again reiterated that inflation in the dollar is still at a high level, but the statement hinted that the dollar interest rate hike may come to an end soon, but this end will most likely end in a crisis.
At present, the financial stress in the United States is serious, not only in the banking sector, but also in the United States as a whole.
On the other hand, Europe's problems also affect the United States.
After UBS announced the acquisition of Credit Suisse, global investors suddenly received the unusually shocking news that Credit Suisse had defaulted on its debts, and $17 billion of bonds had suddenly been written down and disappeared.
Saudi Arabia's previous equity investment in Credit Suisse lost 80% due to bankruptcy, but it was an equity investment, and it is normal for the company to go bankrupt and shareholders to suffer losses.
The priority of the debt should be higher than the equity, and the equity has not been emptied, but the debt is emptied first, which is completely contrary to basic common sense.
This alarming state debt has prompted a massive withdrawal of funds from European and American banks, while a large number of investors have been selling bonds, and now bank bonds have been added in addition to US Treasuries. This could lead to the failure of 186 banks in the United States.
In order to calm the panic caused by this move, a number of top regulators in Europe and the United States have issued statements to stabilize the market turmoil and ensure that in the future, common equity tier 1 capital will still precede losses borne by additional tier 1 capital bonds.
However, investors' trust in European and American banks has been greatly reduced.
The Fed's own data also shows that in the past week, foreign central banks have sold off nearly $80 billion in US bonds, and the current balance has hit a new low.
The financial ** of the United States has also spoken out: the risk of bankruptcy of the US debt is increasing, and new records have been generated in the process of selling off in various countries.
China's current holdings of U.S. bonds have fallen to $859.4 billion, the lowest value in 13 years, and we used to be the largest overseas country holding U.S. bonds, but with our continuous selling, Japan now holds more U.S. bonds than we do.
In the past year, Japan, like China, has sold off US bonds on a large scale on a number of months, and although Japan has increased its holdings of US bonds in a few months, it seems that the sell-off in Japan for the whole year is close to $200 billion.
But despite this, perhaps China and Japan are not the central banks that have sold the most US bonds in the world.
At present, the United States has entered a state of full-speed balance sheet reduction, and since June last year, the Federal Reserve has begun to hold U.S. bonds in the hands of the market.
It's just that because of the monthly report of the Ministry of Finance, everyone's attention is drawn to the sell-off of overseas buyers, and the sell-off of the Fed itself is ignored.
The more the Fed sells, the greater the risk for Treasuries.
So China is continuing to sell U.S. bonds, and at the same time, it is constantly ***
This is because it is able to generate long-term returns to combat inflation, protect purchasing power, and function as a store of wealth.
At present, there are huge security risks in the dollar-dominated European and American financial systems, and economists believe that in order to prevent the collapse of the dollar-dominated financial system, the general equivalent of ** can be considered as the basis of the global currency.
It seems that the PBOC will have more in the future.