Niti Shastra | Navroop Singh, Himja Parekh
The ongoing Iran conflict, now prolonged for over two months, has closed the Strait of Hormuz, triggering a convergence of global economic and strategic pressures challenging U.S. hegemony. Washington faces simultaneous crises: surging Japanese Government Bond (JGB) yields, with the 30-year JGB yield crossing 4.10 percent, are unwinding the yen carry trade, leading to significant Japanese sales of U.S. Treasuries, including ¥4.67 trillion ($29.6 billion) in Q1. Concurrently, U.S. Treasury yields are climbing, with the 30-year hitting 5.19 percent, driven by inflation (PPI at 6.0 percent, CPI at 3.8 percent) and a $1.2 trillion deficit in H1 FY2026. Global crude oil shortages are imminent as the Hormuz blockade cuts 20 million barrels per day, depleting U.S. Strategic Petroleum Reserve (SPR) to 384.1 million barrels, nearing critical levels. These dynamics accelerate de-dollarization efforts and threaten global financial stability, with China and other nations reducing U.S. Treasury holdings.
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