Latest data reveals an interesting paradox: the world is reducing holdings of U.S. Treasuries, yet Japan is疯狂增持.

As of October this year, Japan's U.S. debt holdings have increased for ten consecutive months to $1.2 trillion, regaining its position as the largest foreign creditor of the U.S. Looks absurd, right? But behind this lies a three-dimensional chess game.

**On the surface, Japan is earning from U.S. debt yields, but in reality, it is playing currency hedging.** Yen depreciation is Japan's concern; by increasing U.S. debt holdings, it locks in dollar asset liquidity, while in December, it decisively raised interest rates to 0.75% (a 30-year high), tackling both issues simultaneously to stabilize the currency. The Finance Minister also signaled a strong stance with "decisive intervention in the forex market." With one hand earning from U.S. debt yields and the other intervening in the currency market, this combination demonstrates a ruthless mastery of financial tools.

Meanwhile, the story in other parts of the world is completely opposite. China reduced its holdings by $11.8 billion in October alone, bringing its total to a 17-year low of $688.7 billion. Canada sold off $56.7 billion in January alone. India has been reducing holdings for five consecutive months. This multi-country "non-alliance-style reduction" has put the U.S. in a real dilemma.

The Federal Reserve has cut interest rates three times this year, totaling 75 basis points, yet the cost of financing U.S. debt continues to soar. The 10-year Treasury yield hovers around 4.13%-4.17%, and the 30-year Treasury has broken through 4.8%. Think about it: borrowing costs are rising, while global creditors are shifting—this is the core issue.

**Deeper anxiety lies in the loosening of trust.** U.S. debt has surpassed $38 trillion, and foreign creditors are beginning to reassess the true risks of dollar assets. China has increased gold holdings for 12 consecutive months, and many countries are diversifying their foreign exchange reserves. This is not accidental but a silent challenge to the U.S. dollar's role as the "global pricing anchor."

For investors, this financial web is tightening. Dollar investment returns are becoming more volatile, stock fund valuations are under pressure, and the cryptocurrency market is no exception—liquidity restructuring will impact all asset classes. Some are asking: will global capital flow from dollar assets into cryptocurrencies for safety? Logically, when traditional asset pricing mechanisms fail, alternative assets become more attractive. But this needs time to verify.

At its core, this game has no winners—only those who can endure longer amid the dual squeeze of debt and exchange rates. Will the U.S. 10-year yield break 5% by 2026? What is your judgment?