Key Facts

Bridgewater Associates founder Ray Dalio has warned that China and Japan may gradually pull back from US Treasuries amid domestic economic and geopolitical pressures. The commentary triggered a structural discussion in overseas financial media, viewed as a new warning to dollar asset pricing post the global stock market.

What We Know

  • Core view: Dalio argues US-China-Japan fiscal and trade dynamics are entering a new phase, with cautious analysts judging China projecting US divestment and Japan projecting potential buying.
  • Market reaction: The US dollar index saw some decline, 10-year Treasury futures saw modest gains, and gold futures saw clear gains.
  • Background data: According to US Treasury disclosures, foreign central banks held a share about 3.5 percentage points below the 2021 peak by mid-2026.
  • Expert interpretation: Multiple Wall Street analysts note Dalio’s warning closely ties to expanding US fiscal deficits, long-end interest rates, and consumer data.

Analysis

First, Dalio’s warning is not an isolated judgment but a continuation of his repeated public warnings about post-dollar asset pricing risks over the past year, exposing deep concerns about global capital rotation shifts. China and Japan, as the two largest foreign holders of US Treasuries, will exert clear impact on Treasury market liquidity and pricing through any allocation adjustment.

Second, from a geopolitical dimension, China’s potential motivation for reducing Treasury holdings stems from three factors — tariff resolution dynamics, the long-term strategy of currency resolution, and hedging concentration risk. Japan’s positioning is more constrained by its domestic bond yield curve and yen exchange rate volatility.

Third, from a market structure perspective, foreign central bank share has declined, but absolute scale still exceeds USD 25 trillion. Any reduction will unfold gradually; markets should focus on pace rather than direction.

Fourth, for global asset allocation, this warning signals accelerated diversification toward multi-asset configurations including hedge fund allocation, commodity allocation, and gold allocation safe-haven positioning. Investors should reassess the hard-asset attribute of dollar-denominated holdings.

Fifth, from a medium to long-term impact perspective, the US dollar dominance faces potential challenges from digital currencies and cross-border payment systems. Multiple emerging economies have explored central bank digital currencies and alternative payment systems, which may gradually weaken the global reserve status of dollar assets, though fundamentally changing the existing landscape in the short term remains difficult.

Viewpoints Compared

  • Ray Dalio himself: Believes dollar assets may gradually lose reserve status, with global capital projecting diversified reserve allocation.
  • US Treasury officials: Argue foreign central bank reduction reflects normal allocation behavior and should not be over-interpreted.
  • Wall Street analysts: Judge the reduction pace will be clearly milder than market expectations, not warranting excessive reaction to short-term volatility.
  • Emerging market central bank officials: Internally widely view reserve diversification as one of the major trends, with over-reliance on a single currency unsustainable.
  • Chinese official scholars: Estimates suggest renminxiation is a gradual process with no sharp near-term adjustment expected.

Editor: GoodInfo Global News Team