#夏日创作营 A major global macro strategy reset by the United States: from using geopolitical oil-price weapons to a closed-loop of dollar balance-sheet contraction and currency games

In recent weeks, global markets have been roiled by sharp swings: crude oil has rapidly pulled back from above $90, global equities have kept weakening, and expectations for monetary policy in Europe, the U.S., and Japan have repeatedly shifted. On the surface, this looks like disruption from a Middle East geopolitical conflict; at its core, the U.S. is completing a top-tier replacement cycle of macro strategy tools. From relying on straits geopolitics to push up oil prices and hit the global economy, to proactively converging tensions and switching to the Fed’s balance-sheet contraction plus locking in Europe and Japan’s monetary policy, the whole playbook is clear in logic and explicit in targets: to continuously consolidate America’s absolute economic advantage relative to the rest of the world.

The starting point of this market move comes from escalating expectations of dual blockades of the Strait of Hormuz and the Strait of Malacca, with the Middle East conflict intensifying and driving crude oil quickly to surge above $90. The market once panicked that both straits would be completely sealed, cutting off global energy supplies and pushing oil prices to breach the $100 threshold. But once oil prices surged, a key reverse-feedback logic quickly emerged, directly limiting the U.S.’s incentives to keep allowing geopolitical escalation.

First, the U.S. core CPI is falling, showing that high oil prices have already begun to suppress domestic economic demand in the U.S., creating a clear drag on home consumption.

Second, during this oil-price rally, the AI technology sector—once benefiting from geopolitical premiums—kept falling sharply, implying that the long-term potential return of the AI industry has already declined, the industry cycle has weakened, crude oil price increases can no longer lift technology assets, and high oil prices have fully flipped from a “positive driver for structural equity rallies” into a “negative variable that suppresses the U.S. domestic economy.”

Beyond that, the continued escalation of the Middle East conflict and allowing the two straits to remain locked in for the long term creates two fatal risks for the U.S.

First, a prolonged and extremely tense Gulf situation would continuously erode diplomatic relations between the U.S. and Middle East oil-producing countries, undermining the U.S.’s geopolitical foundation in the Middle East.

Second, if oil prices truly hold above the $100 level, it would inevitably trigger a global large-scale economic recession and a collective collapse of global capital markets—no country can insulate itself from this kind of systemic disaster, and the U.S. would also face a huge shock. That is why, as the market quickly traded and exited on expectations that tensions would ease, crude oil rapidly fell from above $90 to around $85.

But the market has a major misconception: geopolitical easing and falling oil prices do not mean that global tightening pressures are lifted, nor that non-U.S. economies can breathe. Relying only on oil-price declines cannot reverse Europe and Japan’s inflation and economic dilemmas, and it does not align with the U.S.’s core interests.

From a currency perspective, the previous surge in oil prices kept raising imported inflation in the euro area and Japan, continuously strengthening expectations that Europe and Japan would hike rates. If the two straits were to be fully reopened and crude oil were to plunge rapidly, it would instead quickly ease inflation pressures in Europe and Japan, weaken the necessity for further rate hikes—giving Europe and Japan more room for monetary policy easing and significantly releasing economic pressure. This is an outcome the U.S. absolutely cannot accept. Therefore, the U.S. strategic layout is not merely about cooling geopolitical tensions; it is about perfect tool handoffs: use Fed balance-sheet contraction to replace high oil prices, and continue locking in pressures on global non-U.S. economic entities.

The exquisite core of this strategy lies in offsetting the strong stickiness of inflation and the second-round inflation effects of exchange rates. Even if crude oil slowly falls from high levels, the earlier high oil prices have already thoroughly penetrated global supply chains; prices are easy to rise and hard to fall, imported inflation expectations are already deeply entrenched, and they will not dissipate quickly just because oil prices retreat.

At the same time, the Fed’s soon-to-be implemented balance-sheet contraction will tighten global offshore U.S. dollar liquidity, pushing up the U.S. Dollar Index, which will directly force Europe and Japan into sustained currency depreciation. Major depreciation of the euro and the yen would perfectly offset the benefit of falling dollar oil prices: oil and commodity prices priced in the local currency would still remain high. As a result, imported inflation pressure in Europe and Japan cannot be effectively relieved; rate-hike expectations would not disappear—rather, they would be further reinforced by currency depreciation—trapping them fully in the dilemma of “hike rates to suppress the economy, or else inflation runs out of control if you don’t hike.”

And within the whole global currency game, Japan’s policy path has already been fully locked by the U.S., becoming a key lever in the U.S.’s strategic setup. Japan holds a massive amount of U.S. Treasuries. Theoretically, it has two routes to deal with yen depreciation: one is to sell U.S. Treasuries and sell dollars, entering to support the yen and stabilize the exchange rate; the other is to give up exchange-rate intervention and choose continued rate hikes to narrow interest differentials. However, the U.S. has already, through fiscal communications with Japan, fully prohibited Japan from selling U.S. Treasuries to intervene in the FX market. The reason is extremely straightforward: if Japan massively sells U.S. Treasuries, it would crash the Treasuries market, push up U.S. Treasury yields, and disrupt U.S. fiscal and U.S. stock-market systems—directly damaging the financial foundation of the U.S. Therefore, Japan is left with only one viable path—continued rate hikes.

Japan’s passive, continuous rate hikes would trigger three knock-on impacts that align with U.S. interests.

First, as Japan hikes rates while the U.S.-Japan interest-rate differential becomes difficult to close, the yen would remain in a weak-depreciation state, substantially boosting Japan’s export competitiveness. This would directly squeeze China’s manufacturing market share in global trade, creating internal competitive friction in East Asian industries.

Second, the yen is a key global carry-trade currency; continued yen rate hikes would prompt large-scale unwinds of global yen carry trades. Massive funds would keep flowing back to Japan from East Asia, Southeast Asia, and emerging markets in Central Asia, greatly tightening liquidity in the Asian region.

Third, with overall East Asian liquidity tightening and the economy weakening, regional import demand would be directly undermined—pressuring 🇨🇳 economic vitality from both the trade side and the capital side.

In summary, the current global macro landscape has formed an ultimate closed loop. The U.S. actively exits the “high oil-price geopolitical weapon,” avoiding both domestic economic blowback and the risk of a global systemic meltdown; it then activates a new package of tools: Fed balance-sheet contraction + locking Japan’s monetary policy + using a stronger dollar to force Europe and Japan into depreciation. The end result is: global inflation stickiness does not fade, non-U.S. currencies remain under continuous pressure, Europe and Japan are forced to keep tightening, and Asian liquidity keeps tightening.

This entire strategy advances step by step with seamless handoffs, fully locking down the recovery space for global non-U.S. economies, continuously widening the economic and financial gap between the U.S. and the rest of the world, and cementing the absolute dominance of the dollar system. This is the core underlying logic for global economic performance and capital markets over the medium to long term.