Has Powell finally loosened up? What is the real story behind the 'out of control' U.S. Treasury yields?

Analysis of the Federal Reserve Policy and the Global Wealth Siphoning Mechanism: Market Misreadings of Powell’s Speech and Its True Intent

In his remarks, Powell said that fluctuations in oil prices caused by the Middle East conflict are a short-lived, temporary factor and that the monetary policy path will not be adjusted, easing market concerns about interest-rate hikes. The market generally interpreted this as a dovish signal, believing the Federal Reserve is supporting liquidity and paving the way for rate cuts—leading to a rebound in precious metals and an improvement in equities. But this statement is actually intended to remove monetary-policy constraints from the White House’s geopolitical gambles, signaling that even if oil prices surge significantly, the Federal Reserve will not raise rates, thereby giving policy room for the White House’s actions in the Middle East. The United States’ energy structure advantage and the vulnerability of non-US economies: In 2026, the United States’ daily crude oil production is stable at more than 13.5 million barrels per day. As the world’s largest crude oil producer, its dependence on Middle East crude imports has fallen to about 500,000 barrels per day, the lowest level in history, meaning energy supply is affected by Middle East developments only minimally. Oil price increases are beneficial for the United States: shale oil companies gain windfall profits, export revenues rise, and energy-sector stock prices surge. Meanwhile, Europe’s energy import dependence exceeds 60%, Japan and South Korea’s exceeds 90%, India’s exceeds 80%, and China’s exceeds 70%. Higher oil prices will subject these countries to a systemic, comprehensive inflation shock, potentially dragging them into a prolonged stagflation scenario.

The Underlying Logic Behind Risk Statements on US Treasuries

Powell referenced the risk that the growth rate of US debt far exceeds the growth rate of GDP, but did not propose solutions. Its real purpose is risk “forward pricing,” conveying to global capital that the risks of US Treasuries are no secret and come with clear bottom lines. Non-US economies will face unforeseeable stagflation and debt crises, which is intended to guide global capital to flock into the US Treasuries market, underwriting US Treasury issuance and lowering America’s financing costs.

The Strategic Intent of Trump’s Narrative

Through a predictable cycle of “extreme threats—calming,” Trump’s narrative conducts systemic risk desensitization training for global central banks and sovereign wealth funds, gradually leading them to define geopolitical threats as market noise and relinquish the ability to hedge risk. When the real risk materializes, global markets will face a systemic shock without hedging preparations, and capital will flow into dollar-denominated assets—delivering the ultimate “harvest.” This contradictory swing is a precise strategy, aimed at maintaining the market’s comfort zone in terms of psychology and strengthening behavioral inertia.

The True Role of the Private Credit Market

The size of the US private credit market has surpassed $2.3 trillion. The core borrowers are private equity funds engaged in leveraged buyouts, with funding sources including pension funds, insurance institutions, and others—separated by a firebreak from commercial banks’ deposit base. The Federal Reserve can, through selective bailouts, guide capital to withdraw from internationally integrated industrial supply chains and instead flow into America’s domestic strategic industries, becoming a surgical tool for industrial control—serving the “Made in America” strategy.

Policy Significance of Weakness in the Employment Market

A trend of weakening in the US employment market causes residents’ wage growth to slow. This can offset the inflation pressure on the energy side brought by rising oil prices, keeping overall inflation within the range tolerated by the Federal Reserve. That allows the Federal Reserve to keep interest rates unchanged and even cut rates, escaping the policy constraint that would require higher rates to combat upside inflation. Non-US economies, because their employment markets are not cooling in sync, face a policy deadlock of rising inflation and wage spirals.

Reconstructing the Logic of Gold Pricing

Gold pricing is shifting from short-term following of the Federal Reserve’s monetary policy to a long-term vote of no confidence in the dollar credit system. In 2022, global central banks increased their gold holdings by 1,136 tons; in 2023, by 863 tons—adding net holdings for twelve consecutive years. Moreover, the buyers expanded from traditional participants to economic entities loyal to the dollar system. Each time global central banks make pullbacks in the spot market, they increase holdings of physical gold. This reflects a lack of trust in the dollar credit system. The logic for gold to rise over the long term is clear: short-term pullbacks are an opportunity to get in.