The past 12 months were rough on Tokyo, Beijing, Taipei, and New Delhi, which, along with the other biggest Asian financiers, hold nearly $2.9 trillion of Treasury market securities. America’s Asian bankers confronted runaway inflation, Federal Reserve tightening, a Fitch Ratings downgrade, and Moody’s Investors Service threatening to yank away Washington’s final AAA rating.
Now, as 2024 opens, add sticker shock to the mix as the U.S. national debt tops $34 trillion. The U.S. may sell $2 trillion of securities in 2024, with the tacit expectation that Japan, China, and others will dutifully hoover them up.
There are signs that Asia might not go along the way Treasury Secretary Janet Yellen’s staff seems to believe. That could shoulder-check global debt markets in the year ahead.
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In December, the Global Times warned that America’s surging national debt “may trigger another financial system crisis soon.” As such, “it is a precautionary and also prudent decision for China and other countries to trim their U.S. Treasury holdings, given the deteriorating fiscal crunch faced by the Biden administration.”