The U.S. Treasury has always been one of the world's largest bond issuers, yet recent data have sparked Yellen's concerns.

According to reports, last week, 25% of the $24 billion in bonds issued by the U.S. Treasury faced difficulties in being successfully sold, leaving Treasury Secretary Yellen with a furrowed brow.

Faced with this situation, the Treasury tried to shift the crisis onto other countries, but it seems to have been unsuccessful.

What exactly is causing the U.S. debt to be unsellable?

Will countries like Japan, the United Kingdom, and South Korea really foot the bill?

1

Recently, Yellen has been confronted with a thorny issue: the sales of U.S. debt have been less than satisfactory. The United States has always been one of the world's largest bond issuers, yet recent data show that about 25% of U.S. debt cannot be smoothly sold.

The U.S. Treasury has not acknowledged the existence of this problem and has tried to shift the blame onto other factors. However, analysts believe that the real underlying cause is the adjustment of the Federal Reserve's policies.

The Federal Reserve's continuous interest rate hikes have led to rising market interest rates, making bonds that were originally issued at lower interest rates no longer attractive.

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Funds began to sell off previously issued low-interest rate bonds in search of higher-yielding investment opportunities, leading to increasing selling pressure on bonds and falling prices.Facing difficulties in bond sales, the U.S. Treasury Department has no choice but to continuously raise the yield on bonds in an attempt to attract investors. However, even with increased yields, the appeal of U.S. Treasury bonds remains insufficient, making the issuance increasingly challenging.

This also means that the U.S. Treasury Department needs to pay higher interest to attract investors to purchase bonds, further increasing fiscal pressure.

2

The current situation of U.S. Treasury bonds is that they are caught in a vicious cycle, and the only key to breaking it is interest rate cuts. However, in recent years, the rise in the U.S. inflation rate has become a serious issue.

Moreover, unlike in the past, inflation is difficult to transfer to other countries as it used to be. This is mainly attributed to the global trend of de-dollarization, which makes it difficult for the over-issued U.S. dollars to flow smoothly into other countries.

In this situation, inflation can only be borne by the United States itself, posing a dilemma for the Federal Reserve to cut interest rates. Although interest rate cuts are considered an effective means of stimulating the economy, the Federal Reserve faces a difficult choice.

Powell's stance at the IMF forum indicated that he did not see the possibility of interest rate cuts, and even hinted that monetary policy might need to be tightened.

This position reflects a pessimistic expectation for CPI data. If inflation cannot be effectively reduced, interest rate cuts will face challenges.

3

The predicament the United States is currently facing is obviously that it wants to find other countries to shift the burden, but who can it turn to?Based on the United States' recent minor maneuvers, the biggest loser is its ally, the United Kingdom.

Currently, the UK government is attempting to stimulate economic growth through a tax cut plan that could reduce tax revenues by £10 billion. However, this move may bring a series of risks and consequences.

Firstly, the implementation of the tax cut plan will inevitably lead to a sharp increase in the national deficit. To fill the gap in fiscal revenue, the government will have to rely on issuing more bonds.

This large-scale bond issuance could trigger instability in the bond market, leading to a decline in the prices of government bonds. If there is a collapse-like drop in the bond market, it will put immense pressure on the UK's fiscal stability and debt management.

Secondly, a bond market crash could trigger a crisis similar to the stock, bond, and currency triple kill that occurred last September. When the prices of government bonds fall, investors may turn to other markets for risk aversion.

This change in capital flows could lead to stock market fluctuations and sharp currency fluctuations, bringing more uncertainty and risks to the UK economy.

Furthermore, a bond market crash could also have a negative impact on the UK's credit rating and international image. If investors doubt the fiscal stability of the UK, they may reduce their confidence in UK government bonds, thereby increasing borrowing costs.

This will bring greater fiscal pressure to the UK government and may trigger a debt crisis scenario.

However, for the United States, if UK government bonds are sold off, funds may buy US bonds, thus solving the dilemma of US bonds.

It seems that the United States has already made its calculations.