China Unloads More US. Treasuries; Japan Announces "We Cannot Accept U.S. Tariffs"

The People's Republic of China sold off additional US Treasury Debt over this past weekend, bringing the total amount of US Debt they hold to about $779 Billion.  China now holds less US Debt than the UK.

The chart below, from the U.S. Treasury, CEIC, shows the amount of debt held by the largest foreign Creditors:

IT is presently estimated that on Saturday night into Sunday morning, China unleaded approximately $100 Billion of US Treasury Debt.

When a Creditor unloads debt instruments like US Treasuries, it is a signal to markets that the Debt may be riskier.  When that takes place, markets show an increase in the Interest Rates for future Bonds issued by that Debtor nation.

Hence the price on US Treasuries is rising, making it more expensive for the US to finance its debt.

The trouble for the US is how the former Biden Regime financed much of its over-spending during its illegitimate term of office, from January, 2021 - January, 2025:  SHORT TERM BORROWING.

As things stand today, the United States must re-finance approximately seven TRILLION Dollars in Biden-era short-term debt.

However, with interest rates RISING against US Debt, a re-finance of such a huge amount of debt, will make the debt load almost unbearable for the United States; and that assumes entities are still even willing to lend the US money!

If the US holds a Treasuries auction, and few or no bidders participate, then the US may NOT be able to refinance its debt.  What happens then is anyone's guess. 

Does the US PRINT the money to pay the debt?   If it does so, the value of the US Dollar in foreign currency exchange markets would utterly plummet, making foreign goods cost dramatically more.  Does the US re-negotiate with existing debt holders?  If so, US Creditworthiness would fall off a cliff and make it all but impossible to issue new debt because potential lenders will not trust that the US will honor what it agreed to.   Will the U.S. simply Default on its debt?   Doubtful.

The most likely outcome is that the US Federal Reserve would buy the debt, effectively "monetizing" it, but without the immediately impact of printing it outright.

No matter how it's looked at, the US is in a financial bind over the outrageous over-spending it has done, and none of this bodes well for the future.

JAPAN SAYS TARIFFS "UNACCEPTABLE"

Meanwhile, in Japan, Prime  Minister Ishiba announced quite bluntly this morning that his country "cannot accept United States tariffs including for cars."

No one is certain as to what that actually translates to.  It's not like they can smuggle cars into the US.

Eyes all over the world are watching Japan right now to see how this pans-out.

This morning, Certified Financial people are starting to sound alarm bells over Japan:

JUST IN 🚨: Japan's 40-year bond yield just ticked up to 3.48%, its highest level in 2 decades 👀 pic.twitter.com/6lgtcctStI

— Barchart (@Barchart) May 19, 2025

You and your mother should be scared out of your fucking minds https://t.co/9yqU5jat05

— Michael A. Gayed, CFA (@leadlagreport) May 19, 2025

Japan will destroy everything.

Goodnight.

— Michael A. Gayed, CFA (@leadlagreport) May 19, 2025

Zooms out

Yeah we are going to goblin town pic.twitter.com/dqgYzg6NCD

— bb.cappital (@bbcappital) May 19, 2025

This social media posting seems to sum-it-up best:

Imagine you money deposited in a bank, when you try withdraw it, bank can’t give you your own cash because it’s short on liquidity. Meanwhile, you have bills to pay, without access to your funds, you’re forced into bankruptcy. Now, think of Japan as you, U.S. Treasury as bank.

— Matt Pedini (@MattPedini) May 19, 2025