Japan is now the top holder of US debt, reaching $1.212 trillion in May, marking a slight increase from $1.218 trillion in April. Total foreign holdings declined by $7.42 trillion in May as those who see what is coming want no part in government debt.

This did not go well for Japan in the past. You see, the USD remains the last safe haven among currencies. Rates are set to rise, other currencies are set to decline, and the countries left holding US debt will be forced to pay much more than intended. No one seems to understand this simple staple of FOREX.

China unloading US debt could indicate growing geopolitical tensions, which our models indicate could break out in 2023.