Sometimes, the one who strikes a heavy blow from behind is not necessarily an adversary, but could also be an ally.

On July 2nd, Federal Reserve Chairman Jerome Powell delivered a speech at the European Central Bank Forum, the gist of which was: The United States has made significant progress in inflation, and the inflation rate will not exceed 2.5% within the next year.

The implication of this statement is that the Federal Reserve may be considering a rate cut, but the timing of such a cut remains ambiguous. Influenced by this news, the U.S. stock market rose across the board.

As for whether this release of a rate cut signal is a smokescreen or a genuine intention to cut rates, perhaps only the Federal Reserve knows for sure.

However, the European Union and Canada, two allies, have already taken the lead in cutting rates, preemptively opening the curtain on a global rate cut. The Federal Reserve, which has not yet completed the dollar harvest, is like sitting on pins and needles. The previous situation where the dollar commanded the world has been broken, and allies have begun to have their own ideas.

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Yet, this kind of backstabbing has not ended, and it may only be the beginning.

According to the report on international capital flows released by the U.S. Department of the Treasury, the three major U.S. allies have dumped $80 billion in U.S. Treasury bonds, including Japan, the United Kingdom, and Canada.

The data released shows that Japan, as the largest overseas "creditor" of the United States, took the lead this time, directly selling $37.5 billion in U.S. Treasury bonds, and the United Kingdom was not far behind, selling $17.9 billion.

In addition, Canada sold $24.7 billion. The three major allies have fiercely stabbed in the back, selling a total of $80 billion in U.S. Treasury bonds within a month, which is not a small scale of sale.During the same period, China slightly increased its holdings of U.S. Treasury bonds by $3.3 billion. From January to March of this year, China has cumulatively sold off $48.9 billion in U.S. Treasury bonds. Although there was a brief increase in holdings, the overall position so far this year is still declining.

It is important to note that in 2022, China's holdings of U.S. Treasury bonds were as high as $100 billion. After two years of gradual divestment, the current holdings have fallen to $77.07 billion, with a reduction of $22.93 billion.

Japan has the largest scale of selling U.S. Treasury bonds this time, and the reaction from the outside world is also very strong, especially in the United States.

It is important to note that in April of this year, the United States suddenly released a signal to raise interest rates. Asian currencies were caught off guard, and under the offensive of the strong U.S. dollar, exchange rates turned downward one after another. Among them, the Japanese yen exchange rate plummeted, once hitting the lowest level in more than 30 years.

Seeing the Japanese yen falling to an unacceptable level, the Bank of Japan urgently used foreign exchange reserve funds to intervene and save the market, spending more than 9 trillion yen, equivalent to more than $60 billion. It is not ruled out that it includes U.S. Treasury bonds sold by Japan.

However, Japan's huge investment in market intervention this time has failed. In June, the Japanese yen exchange rate once again experienced a sharp decline.

Due to the United States' delay in cutting interest rates, the strong position of the U.S. dollar has always continued, coupled with the huge interest rate difference between the United States and Japan, which has led to international short positions continuously shorting the Japanese economy. The Japanese yen exchange rate has fallen again and again, once again falling to the 160 mark. The market's view on the yen is generally pessimistic, and some institutions believe that the yen may fall to 170.

The United States is too obvious in targeting Japan this time, and Japan's resistance has also attracted the suppression of the United States. Yellen has clearly warned that intervening in the market is not an appropriate way to solve the problem, and timely communication is very necessary. Yellen has issued warnings to Japan more than once.The statement has been made very clear: the United States means that if Japan wants to sell U.S. debt, it must seek my consent, otherwise the consequences are at your own risk.

Although the data on Japan's holdings of U.S. debt in May has not yet been announced, according to Japan's foreign exchange reserve data in May, foreign bonds were reduced by 50 billion U.S. dollars, which means that Japan may have sold 50 billion U.S. debt in that month.

Combined with the 37.5 billion U.S. debt sold by Japan in April, Japan has sold more than 80 billion U.S. debt in just two months, this "backstab feeling" has caused great dissatisfaction from the United States.

In order to harvest Japan, the United States can be said to be sparing no effort, at the end of June, the United States included Japan in the "monitoring list" of exchange rate manipulation, and has regarded Japan as a piece of meat on the chopping board. Since the United States raised interest rates, Japan has been harvested by the United States many times in a row, and after each harvest, there is another.

In this round of the dollar tide, the action of the dollar raising interest rates is fast and fierce, quickly attracting global capital to flow to the United States. However, it is currently stuck in the process of reducing interest rates, and the financial sickle that has been tried repeatedly cannot be put down this time.

This is also the reason why the Federal Reserve has not reduced interest rates for a long time. Reducing interest rates means surrendering. Before completing the harvest cycle, it is necessary to launch a harvest against other large economies. Japan has become the "sacrifice" of the dollar tide.

However, under the influence of sustained high interest rates, there are already many crises within the United States, such as the sharp decline in commercial real estate prices, bankruptcy of small and medium-sized enterprises, and floating losses on the books of major banks. How long can the United States itself hold on? This is destined to be a war of attrition!