Do you think US Treasuries have been continuously sold off?

The reality is not the case.

With the final data for August also released, taking the price trend of 10-year US Treasuries as an example, US Treasuries have seen a continuous four-month increase.

If they have been continuously sold off, how could the price keep rising?

In April of this year, the 10-year US Treasury fell by 3.03% for the entire month, but after entering May, it started this wave of four consecutive increases. It rose by 1.35% in May, and increased by 0.78% and 2.12% in June and July respectively, and rose again by 1.61% in August.

The rise in US Treasury prices indicates that active buying is dominant, which is undoubtedly good news for Yellen.

However, the actual situation is even more worrying for Yellen. Although the price of US Treasuries is rising, and there is indeed a large amount of capital continuously buying, the data shows that the main buyers are from the United States.

Data as of the end of June shows that all overseas funds hold only $8.21 trillion in US Treasuries, which is only slightly more than 23% of the total scale of $35 trillion, which means that another 77% of US Treasuries ultimately flow back to the United States.

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In the eyes of many people, US Treasuries are a tool for global harvesting, but now that nearly 80% of US Treasuries are in the hands of Americans, it's no wonder that this wave of harvesting in the United States is not successful.

At the same time, there are also many unfavorable factors that are testing the United States.Not long ago, the United States released the revision of employment data for the past 12 months, and it was found that the employment data for the consecutive 12 months from April of last year to March of this year needed to be significantly reduced by 818,000 people.

The employment increase in July was only 114,000, and the current unemployment rate has risen to 4.3%.

This means that the tight labor market in the United States has actually been an illusion.

Now analysts are pinning their hopes on the Federal Reserve's interest rate cuts to alleviate the economic difficulties in the United States. However, after the interest rate cut, the US dollar will rapidly depreciate, which may instead burst the economic bubble in the United States. After all, this scene has occurred in 2008.

In fact, interested friends can review history.

In mid-2006, after the Federal Reserve completed its last interest rate hike, the federal interest rate at that time was 5.25%, and the current federal interest rate is also 5.25%.

At that time, the Federal Reserve realized that it could not continue to raise interest rates, as the economy had already shown some bad signals, but despite this, the Federal Reserve did not immediately cut interest rates and maintained this high interest rate for two years.

This is similar to the current Federal Reserve's persistent resistance to interest rate cuts and maintenance of high interest rates.

It was not until the second half of 2007, when the Federal Reserve realized that the problem was getting bigger and bigger, that it began to cut interest rates. At that time, the US dollar index further rapidly depreciated, and by early 2008, the US dollar index even depreciated to 70.69.

The subprime mortgage crisis occurred, coupled with the depreciation of the US dollar, and a large amount of capital fled the US financial market.The scene has not yet unfolded, but what is strikingly similar to 2007 is that the Federal Reserve is about to start cutting interest rates. Before the rate cuts begin, the US dollar index has already started to depreciate.

What's worse, the Bank of Japan has indicated that there may be a need for interest rate hikes. This is undoubtedly a signal to push funds further away from the United States.

Perhaps even more concerning developments could emerge in the next one to two years. That is, we have recently observed a recovery in China's prices, especially with the acceleration in the price increases of daily consumer goods such as vegetables and fruits. It is very likely that within one to two years, China's inflation could return to above 2%.

At that time, the People's Bank of China may need to start raising interest rates, and by then, the US dollar's interest rates would have already been lowered. This means that the Bank of Japan's rate hikes would guide funds to start withdrawing from the United States, followed by the People's Bank of China's rate hikes, triggering a larger scale of capital flight.

By then, the 77% of US Treasuries held by funds in the United States might become a ticking time bomb.