Investigation | Global Bonds | Sovereign Realignment | Yield Compression | Fiscal Saturation | De-Dollarization
For Decades, the U.S. Treasury Was the Center of Gravity. Now It’s Losing Pull.
For half a century, the U.S. Treasury market acted like a planetary core—the deepest, safest sink for global capital. Every sovereign orbiting it was pulled by the same force: yield, safety, and the supremacy of the U.S. dollar.
But in 2025, that pull feels weaker. The gravity well isn’t broken—it’s full. And that saturation is the signal.
Yield Compression Reveals a Belief Problem.
The 10-year Treasury yield hovers around 4.35%. With inflation near 3.2%, the real reward is barely 1.1%. That’s not attraction—it’s erosion.
For long-time buyers like Japan and China, holding U.S. debt no longer looks like strategy; it looks like exposure. When yield compresses, belief doesn’t vanish—it migrates.
Japan’s Retreat Is Deliberate.
A new Prime Minister has revived an Abenomics-style push for domestic stimulus and yen-based growth. Tokyo is reclaiming its liquidity sovereignty, redirecting funds from U.S. Treasuries to local projects.
Japan cut roughly $119 billion in U.S. holdings in Q2 2025—the sharpest quarterly drop on record. Washington’s push for Japan to invest $550 billion into American infrastructure, without control, triggered quiet resistance.
This isn’t rebellion. It’s realignment. Abenomics 2.0 weakens the yen, strengthens home demand, and re-anchors autonomy.
China’s Exit Is Strategic.
China’s U.S. debt holdings have fallen below $760 billion—down more than 40% from their 2015 peak.
This isn’t panic selling. It’s de-dollarization by design.
Beijing’s playbook now revolves around:
- Yuan-settled trade deals,
- Gold accumulation, and
- Bilateral payment networks across Asia, Africa, and the Gulf.
The People’s Bank of China doesn’t need to announce a gold standard; it simply lets citizen conviction perform it. Retail buyers stack gold bars—and the state lets the narrative write itself.
Capital Is Rotating — Quietly, but Decisively.
Global investors are trimming U.S. exposure. Over $150 billion has flowed out of U.S. growth funds this year.
Sovereigns aren’t reloading Treasuries—they’re rehearsing sovereignty. The U.S. fiscal core, once a magnet, now performs saturation. Real yield is thin, fiscal deficits are expanding, and the assumption of infinite demand is fracturing.
The Myth of Endless Appetite Has Expired.
The story still says “foreign buyers will always return.” The data says otherwise.
Japan and China aren’t selling in panic. They’re writing a new choreography—a slow, disciplined retreat from dependence on U.S. debt.
The Gravity Well of the dollar isn’t pulling capital in anymore. It’s overflowing—and belief is quietly finding new orbits.