Asia's central banks threaten US Treasury market — SkimNews
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- Ray Dalio warned this week that Tokyo and Beijing might stop financing America's deficits, telling Bloomberg the debtor-creditor relationship has become adversarial, adding in a separate June warning that the US is 'past the point of no return' on debt
- Japan holds $1.1 trillion in US Treasuries and China holds $618 billion (down from a 2013 peak of $1.32 trillion), with Asian central banks collectively holding roughly $2.5 trillion — if they pull back 'arguably no one' can replace that demand, the source notes
- Treasury Secretary Scott Bessent has pressured the Bank of Japan to accelerate rate hikes, putting him at odds with PM Sanae Takaichi and finance minister Satsuki Katayama, who called Bessent's 'I am the house now' remark about yen policy 'scary'
- Trump hosted Chinese President Xi Jinping at a September summit with red-carpet treatment and zero regard for Tokyo's concerns, while separately demanding a $550 billion 'signing bonus' investment commitment from Japan that Tokyo is reportedly slow-walking
- Bill Gross, co-founder of PIMCO, advised investors in a September 30 Financial Times op-ed to 'Don't own bonds,' flagging total American government, mortgage and corporate debt of roughly $84 trillion — now 100% of GDP
- US Treasury yields have climbed to 5.28%, a 24-year high, despite Bessent's Treasury buyback plan, with Bessent's promise to be 'bending the curve' on federal borrowing failing to convince markets
Why it matters: America's fiscal model requires willing foreign creditors, and Japan and China are the two largest — a coordinated pullback by Asian central banks could trigger a Treasury market crash that makes the 1998 LTCM implosion and 2008 financial crisis look tame by comparison, exactly as Washington needs ever more borrowing with debt at 100% of GDP.
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