China Cancels Treasuries With Euro Bonds as Beijing Cuts Off US Assets, Forever

All right, guys. So, the Hormuz crisis just got a little weird again. Now,

funny how escalations always seem to happen right after the markets close and then pause right before they open again.

Now, Axios is now reporting that the US and Iran, they have halted attacks on each other. The US is still talking very

each other. The US is still talking very tough to the world. They are warning Iran that the US military will continue striking the country whenever Trump deems it necessary.

that President Trump is going to sit sit by, stand by while Iran continues to attack international shipping without a response or bases without a response.

They're sadly mistaken and they saw that loud and clear over the last few nights where we'll continue to militarily, if needed, take down their infrastructure that they're trying

to use to illegally But, at this point, their rhetoric is almost entirely posturing. The window

for genuine military escalation is just narrowing. The real worry consuming

narrowing. The real worry consuming Washington right now has nothing to do with missiles or drones. It's the

petrodollar system. And if this war doesn't end cleanly and Iran keeps hanging on, the entire Middle Eastern oil trade could move away from dollars.

And this is a threat that really terrifies Scott Bennett. The real

motivation behind every US move in this conflict has always been about protecting the dollar trading system, not really nuclear weapons, not regime

change, but the USD. Now, as part of the sanctions relief being offered to Iran, Bennett is demanding that Iran invoice all their oil sales in US dollars going

forward. And that single demand reveals

forward. And that single demand reveals the scale of Washington's panic about de-dollarization more clearly than anything else, more clearly than even

Joe Biden's era. Now, China is growing in economic strength at a pace that Washington is really struggling to keep up with. And if nothing changes the

up with. And if nothing changes the trajectory, global trade, including the most critical commodity on earth, oil, is going to migrate away from the dollar

as the settlement currency.

Now, major reason gold prices fell recently was directly because of Basson's coordinated plan to reassert dollar dominance. Now, he revealed a

dollar dominance. Now, he revealed a strategy to pull Venezuela back into the dollar system.

Maduro has been selling discounted Venezuelan oil to China in exchange for Chinese RMB. And that specific bilateral

Chinese RMB. And that specific bilateral arrangement has to be broken in Washington's view. The Iran deal may

Washington's view. The Iran deal may very well include a hard dollarization clause requiring all Iranian oil to be invoiced in USD as a condition of sanctions relief. That might happen. And

sanctions relief. That might happen. And

we can expect Washington to pursue the exact same terms when they eventually talk with Russia. Now, Trump and Basson are clearly going to run the same playbook across every major oil producer

that they can reach. Even mainstream US financial media is starting to acknowledge what's actually happening.

They aren't writing about currency fluctuations anymore. They're

fluctuations anymore. They're documenting how China is building an entirely new financial architecture outside the US control system.

This is not just dedollarization, it's CIPS payment rails replacing Swift. It's

the digital RMB expanding all around the world.

And more per significantly for long-term dollar dominance, it's China aggressively expanding their own global bond market to compete directly with US Treasuries. And here's the fundamental

Treasuries. And here's the fundamental difference between Chinese and US bond markets right now, and tells you everything about the divergence happening around the world. Now, in the

US and across the G7, bond yields are getting higher and higher. Why? Because

inflation is a serious and it is a persistent problem. Rising inflation

persistent problem. Rising inflation forces investors demand higher yields to compensate for the erosion of their purchasing power. Now, China's moving in

purchasing power. Now, China's moving in the exact opposite direction. Chinese

bond yields have actually been falling for quite a while. He has fallen below Japan and it's not just a statement about demand for Chinese debt. It's a

statement about the health of the Chinese economy compared to the inflation-stricken economies of the West. China doesn't

have a serious inflation crisis. They

have a production boom where manufactured goods keeps getting cheaper and global demand for Chinese products keeps growing. There's just so much

keeps growing. There's just so much investor demand for Chinese debt that Deutsche Bank, a major German financial institution, just issued their second largest panda bond. A large Western bank

that choosing to issue bonds inside China's domestic market because the demand debt is simply enormous and it's growing.

Now, the issuance was 3.5 billion yuan and was oversubscribed by more than two times.

Final yields came in at below 2% because there were far more buyers than bonds available. But, that's just the domestic

available. But, that's just the domestic side of China's bond market expansion.

Now, what's really alarming Washington is China is doing this around world.

Now, Beijing just raised 5 billion euros in a record-breaking bond sale targeted directly at EU institutional investors.

Now, China timed this issuance very well. They are very strategic about it.

well. They are very strategic about it.

They are issuing EU-denominated bonds right now before European inflation rises again and the ECB has to tighten interest rates. They need to hike even

interest rates. They need to hike even more.

That is very expert financial timing.

Kind of shows how seriously China is playing this long game.

Now, why is China issuing bonds in euros rather than just the yuan? Because

Beijing is trying to create an international accessible bond market that lures capital away from US Treasuries. Now, these bonds were

Treasuries. Now, these bonds were perfectly marketed to EU pension funds, insurance companies, large asset managers, and even sovereign wealth

funds. The exact same people who have

funds. The exact same people who have been buying US Treasuries over the last few years, over the last few decades.

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And the demand was staggering. Now,

China was trying to just raise 5 billion euros, but orders came in at nearly 30 billion. The issuance was five to six

billion. The issuance was five to six times over subscribed. Now, the level of demand allowed China to borrow at extremely low rates, reinforcing their

ability to keep issuing more debt globally at favorable terms. Now, in April alone, China's trade surplus with Europe was almost 32 billion euros in a

single month. That is enormous fiscal

single month. That is enormous fiscal firepower that Beijing can really use.

They can redeploy them into building a global bond market and compete head-to-head with Washington.

Now, China's selling bonds in euros to absorb global capital. That is the end goal. Plus, they have essentially

goal. Plus, they have essentially unlimited capacity to pay back bond holders back because of their massive foreign currency surplus every single

month. Now, this is a patient campaign

month. Now, this is a patient campaign to chip away at US financial market dominance one issuance at a time. And

the demand signal cannot be dismissed.

China tried to raise 5 billion, but they received 30 billion in orders. And when

the world's institutional investors, they show up six times with the money you're asking for, you're not really begging for capital, you're rationing it. This reality is clearly not lost on

it. This reality is clearly not lost on Bezn. Now, he's been appearing on TV

Bezn. Now, he's been appearing on TV more frequently trying to convince the world that major oil producing nations are returning to the US dollar system.

He's trying to sell us the dream that dollar dominance is being reasserted.

And that desperation tells you how really worried he is under the surface.

That Russia will want to come back in the dollar system because again, you know, the the dollar, it's our liquidity, it's our capital markets, it's the depth and breadth. Everyone

wants to be here. We should not be shy about flexing where we have advantages and where we have advantages, share with our allies, and push back.

But China's euro bond strategy is only one lever being pulled. Now, China can also deploy their a accumulated stockpile of US dollars as a financial

weapon in their own right. Now, back in November 2025, China issued bonds denominated in US dollars directly. And

they sold approximately 4 billion worth of dollar denominated Chinese government debt into global markets. And demand was so big that China was able to borrow at

a rate of only 0.02 percentage points above US Treasuries themselves. And let

that sink in for a moment.

Global investors, they trusted China's ability to pay back at essentially the exact same level as the United States government, which is the issuer of the

world's reserve currency. This is

insane. This is a stunning vote of confidence in Chinese sovereign debt from the global investment community.

Now, this is really nightmarish for the US in the current inflation environment.

Now, core PC inflation has been rising consistently since Trump took office, and the home mortgage crisis really made everything dramatically worse.

The US has been running above their own 2% inflation target for five consecutive years and counting.

So, the Federal Reserve is going to be forced to hike rate at some point sooner or later.

And the cruel irony is that because of high US inflation, American consumers and business, they're going to become even more dependent on China for affordable products.

In May alone, Chinese shipments to the US jumped by incredible 35.4% compared to a year ago, which means China's accumulated dollar surplus from trade

with the US itself is actively growing.

China has more dollars every month to deploy into building their own competing financial sector.

Now, China is sitting on a growing mountain of dollars and euros, and that means they need to deploy all that capital somewhere, right? They can't

just buy dollar or EU bonds themselves.

Now, investing aggressively in the AI race and the chip war is one avenue for sure, but a lot of money and consistent flow is going into gold, physical gold.

Now, China's official central bank gold holdings have been increasing, especially during the recent periods where gold prices have been dropping.

The People's Bank of China bought almost 10 tons of gold in May alone, and despite the recent price drop, gold still represents over 9% of China's total foreign exchange reserves. And

that percentage is only going in one direction, it's going up. But it's not just the Chinese Central Bank accumulating gold, the entire Chinese population is buying. China's monthly

private gold imports reached their highest level in two full years last month. Physical gold is systematically

month. Physical gold is systematically drained from Western vaults all the way to China. Gold is moving from the west

to China. Gold is moving from the west to the east. Trust in paper currencies and government-issued debt is really collapsing across Chinese society at

every level, from the Central Bank all the way down to individual savers. Now,

even if US bond yields are rising and they're offering higher nominal returns, China is genuinely done adding to their US asset exposure.

They don't want to open Pandora's Box all over again. Those bonds could get confiscated or frozen the way Russian assets were. And the underlying US debt

assets were. And the underlying US debt problem isn't getting better. So, the

risk and reward doesn't make sense for China. The idea of holding US bonds has

China. The idea of holding US bonds has fundamentally changed for the Chinese.

Now, China's gold buying program is also not going to stop or slow down regardless of what Washington does to manage gold prices in the short term. A

month ago, Beijing conducted a major crackdown on domestic capital outflows, And they are making it very difficult for Chinese domestic capital to exit the

country. So, flows to Hong Kong, they

country. So, flows to Hong Kong, they might end up invested in US stocks and bonds, and China doesn't want to doesn't want that to continue.

In 2025, China saw capital outflows of approximately $1 trillion leave the country. Beijing is now actively

country. Beijing is now actively clamping down on every channel through which the capital was escaping.

They want the money flowing back to Chinese companies, industries, Chinese domestic bonds, and gold. This is

economic warfare being conducted for financial architecture rather than military force. And Trump is doing

military force. And Trump is doing everything possible to drum up demand for US assets through constant messaging. He's trying to hype up

messaging. He's trying to hype up investors to buy US stocks.

You better go out and buy stock now. Let

me tell you, this this country will will be like a rocket ship that uh goes straight up. This is going to be numbers

straight up. This is going to be numbers that nobody's ever seen before. Uh

that's a very important element of all of this, you know, if we get Now, the bond market is under tremendous and growing pressure from multiple directions. Not just from domestic

directions. Not just from domestic inflation and the threat of Fed rate hikes, but from without as well.

China is withdrawing demand from the outside. Now, Bezing is admitting that

outside. Now, Bezing is admitting that the dollar system is in trouble, and that's just the opening admission of what's going to come.

As China continues exporting more goods globally and protecting their own global capital, demand for US bonds and demand for US assets is going to get hammered.

Now, China's M2 money supply has now reached 240% of GDP. And that money is effectively trapped inside China's own financial system right now.

And if Beijing maintains their capital controls and refuses to allow that money to flow to US assets, the Chinese bid for gold is not going to stop. It's

actually going to accelerate significantly from here."

So, let me know what you think in the comments below. Will China keep issuing

comments below. Will China keep issuing dollar and euro bonds to grab demand away from US Treasuries? And will this drive even more Chinese money into physical gold? Let me know what you

physical gold? Let me know what you think. Stay safe. Smash the like button

think. Stay safe. Smash the like button and subscribe as we navigate through these crazy times.