The U.S.** soared to new highs, and investor optimism naturally grew. However, this is not good news for US bonds.
1. 34 trillion U.S. bonds may be sold off on a large scale?
Because it means that the risk of a large-scale sell-off in US Treasuries has increased.
Actually, it's not hard to understand.
In recent years, the United States has unscrupulously issued US bonds and borrowed money from the rest of the world, which is essentially a trick of eating more than anything else.
At present, the size of the US debt has exceeded 34 trillion US dollars. If this debt were averaged out to Americans, then each American would have to take on $100,000 in debt.
What's worse is that the U.S. debt is snowballing.
According to a report by a US research institute, if the current momentum continues, US debt may exceed $50 trillion by 2030.
The sheer size of U.S. debt also means a huge risk.
In the event of a default, investors may sell US bonds on a large scale at any time in order to reduce their own risks and losses.
The risk of a massive sell-off in U.S. Treasuries has soared.
It is precisely for this reason that the United States has approached China several times, hoping that China can help stabilize the overall situation of the US debt.
However, China understands very well that the US debt may explode at any time. If the United States intends to let China carry the mine, China will never agree.
Of course, the United States will not sit idly by, and they have another trick, which is to pass on the risk of a fast-growing default on US debt.
And the way to pass it on is to harvest other countries.
Under such circumstances, some countries with obvious economic structure and financial debt problems are more likely to become targets for the United States.
India is one of them.
Second, the scythe of US debt is waved, and Modi's dream of becoming a strong country is shattered?
It is undeniable that after decades of development, India's economy has indeed made a lot of achievements.
But behind these achievements, there is a huge risk, and that is the debt problem.
Relevant reports show that the debt ratio of many emerging market countries continues to rise as the global debt scale reaches a new high in 2023. India, in particular, is under increasing pressure to repay its debts.
You must know that a very important reason for the rapid growth of India's economy is that the huge amount of US debt that has been accumulating has stimulated investment and related production and consumption.
This means that once the United States begins to harvest India, there is a good chance that India's economy will be greatly affected.
India's economy may be greatly affected by US debt.
To make matters worse, India lacks sufficient capacity to respond in the face of the US harvest.
Even the Reserve Bank of India (RBI) has to admit that they have little to do to control their currency, the rupee.
In order to stabilize the overall situation of US debt, the Reserve Bank of India (RBI) has constantly intervened with foreign exchange reserves.
However, the latest data shows that as of January this year, India's foreign exchange size was $568.9 billion. This is down nearly 13 percent from the same period last year.
This means that even if India pays the price of losing its foreign exchange reserves, it will still not be able to stop the rupee**.
And this will inevitably affect the confidence of foreign investors in India.
Many discerning foreign investors have opted to withdraw from India. There are also investors who are reconsidering investing in or working with India.
For foreign investment, India's cheap labor and huge market are indeed attractive.
However, after weighing the pros and cons, they do not want to take the risks that come with it.
And this is undoubtedly a vicious circle.
After some foreign capital has withdrawn from India, other foreign companies investing in India will more or less doubt the prospects of India's economic development and even begin to consider withdrawing.
As a result, India's investment environment will fall into an even more unfavorable situation, which in turn will have a significant negative impact on India's economy.
There are even professionals who warn that if this situation continues, India's economy could go backwards.
This is not good news for India.
You know, Modi has previously released words to make India's economic development to the level of "third in the world".
Indian Prime Minister Narendra Modi.
Now, India is in trouble with being harvested. If we do not find a way to do it quickly, let alone "third in the world", we may not even be able to maintain the current development gains.
In fact, India is not the only country that has been frantically harvested by US debt, and Vietnam has also suffered greatly.
Third, the U.S. debt is frantically harvested, and Vietnam will not be able to escape the catastrophe.
Like India, Vietnam's foreign capital has also been greatly lost due to the impact of US debt.
Studies have shown that the total investment of foreign investment in Vietnam has decreased by more than 30% since last year. Intel and other foreign companies have chosen to withdraw from Vietnam.
Not only that, but Vietnam's exports have also been greatly affected. Exports to the United States, in particular, fell by more than a dozen percentage points year-on-year.
However, these are not the biggest difficulties facing Vietnam's economy.
What is more of a headache for Vietnam is actually the risk of debt.
As of January 2023, Vietnam's debt size reached more than $230 billion.
In stark contrast, Vietnam's foreign exchange reserves have fallen to more than $80 billion.
In other words, even if Vietnam uses all its current foreign exchange reserves to repay its debts, it will not be enough.
Moreover, the Fed continues to raise interest rates.
As a result, Vietnam's debt service costs will inevitably increase further, and the risk of debt default will also increase.
Vietnam is also not immune to the harvest.
Obviously, the United States is still the same old-fashioned, it has its own disease, and it wants the whole world to take medicine with it.
In fact, it is not a day or two that the United States has harvested the world with US debt.
The most fundamental reason why the United States has been able to succeed again and again is that the US dollar has established its status as a world currency and is deeply involved in international economy and trade by linking it to hard currencies such as ** and oil.
Of course, this also means that if the dollar loses its status as a world currency, the United States can no longer harvest the world with impunity as it does now.
In fact, the wave of "de-dollarization" has already swept the world. Under such circumstances, it will probably become more and more difficult for the United States to engage in the trick of harvesting and de-risking. The stone of the US debt will inevitably hit the United States itself in the foot.