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Since the outbreak of the US-Iran war, it has triggered another debt crisis in the United States, with US Treasury bonds being sold off by central banks and other investors amounting to $90.9 billion, leading to a liquidity crisis for the dollar.
At the same time, on April 10, China issued approximately 332 billion yuan of Chinese government bonds, which were sold out within one minute.
Why has this war severely impacted the financial system of petrodollars? What role will the renminbi and renminbi assets play in the international community in the future?
According to data from the official website of the Ministry of Finance of China, on April 10, China issued four types of bonds, with a total scale of 332 billion, among which the 3-year and 5-year savings government bonds were sold out within seconds after being launched.
This shows that the demand for Chinese government bonds in the financial market is very high. Although the interest rates are relatively lower compared to US Treasury bonds, China's fiscal deficit rate is good, making it the healthiest fiscal situation among all countries in the world.
Therefore, whether China issues renminbi bonds domestically or dollar bonds overseas, despite the interest rates being far lower than the average rates of other countries, the demand has always been strong.
In the eyes of domestic and foreign investors, there is no need to worry about the potential default of Chinese government bonds, nor about significant fluctuations in bond prices. More importantly, due to their popularity, they have good liquidity.
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In contrast to US Treasury bonds, there are very few sovereign countries' central banks that have been able to continuously increase their holdings of US Treasury bonds in recent years, with only Japan and the UK remaining. Currently, Japan has become the largest holder of US Treasury bonds.
The yen and the dollar, Japanese bonds and US bonds have become highly correlated and bound. In order to continuously provide financial support to the US, the Japanese public has not only been bearing high prices but has also suffered from the continuous depreciation of the yen, which has harmed Japan's raw material imports and further damaged its manufacturing exports.
More critically, after this war, the credibility of the United States has been almost completely lost, leading many sovereign countries' central banks to accelerate the sale of US Treasury bonds, including some sovereign wealth funds that have also begun to sell.
The reason for selling US Treasury bonds is not only due to the unreliability of US President Trump but also because Iran has blocked the Strait of Hormuz and is using cryptocurrency and renminbi to collect tolls.
More importantly, this war has revealed to all countries globally, especially oil-producing countries in the Middle East, the essence of the decline in US military power.
When the military hegemony of the United States cannot protect the security of other oil-producing countries, the cycle of petrodollars will be broken or diverted, and oil-producing countries in the Middle East will need to seek a sense of security based on the principle of not putting all their eggs in one basket
More critically, in this war, other countries within NATO have retreated without fighting, so sovereign bonds and currencies such as European debt, Japanese debt, and British debt will not be included in the alternative options.
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At this time, whoever can ensure that the conflict in the Middle East does not escalate will have their currency valued by oil-producing countries, which will actively bind oil to that currency.
According to reports from overseas media, during this period, the trade volume of the renminbi in the Middle East for oil settlement is substantial.
The daily trade settlement volume of the renminbi in the CIPS system has exceeded USD 1.2 trillion.
This is not only due to the increased convenience of trade settlement but also represents a substantial shift in geopolitical trust.
The practice of linking the renminbi to oil is evolving from bilateral pilots to regional mechanisms, with countries like Saudi Arabia and the UAE beginning to include renminbi pricing options in energy contracts. As the China-GCC free trade agreement progresses and local currency swap agreements expand, the renminbi is gradually upgrading from a settlement tool to an anchor asset.
This structural change is quietly reshaping the global pricing power of commodities

SCHI

GOVT

The U.S. debt crisis has intensified, with $90.9 billion in U.S. Treasuries being sold off, leading to a dollar liquidity crisis. Meanwhile, China issued 332 billion yuan in government bonds on April 10, which sold out in one minute, demonstrating strong market demand. Although China's government bond yields are lower than those of the U.S., investors have high confidence due to its sound fiscal situation. In contrast, countries holding U.S. Treasuries have decreased, especially Japan, which is facing high prices and pressure from yen depreciation. This war has damaged the credibility of the U.S., prompting central banks around the world to accelerate the sale of U.S. Treasuries

腾讯新闻 - 财经

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$90.9 billion in U.S. bonds were sold off, $332 billion in Chinese government bonds sold out in 1 minute, and trillions of capital are betting on China