Dollar assets can't draw fresh blood: US stocks and bonds enter the tail of the cycle
The rise of dollar assets (US stocks + US Treasuries) rests on a continuous global inflow of incremental capital; now that Treasury yields are high and Japan moves the whole board, the US can find almost no way to draw in enough new money, and major asset classes enter the tail of the cycle of high-volatility stock-game competition.
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The policy sticking point in services consumption is the form of employment
The Politburo readout singled out ‘services consumption’, which the market usually reads as consumer stimulus; the signal this episode teases out is the form of employment. China's services sector was digital and platform-based from the start, and AI-ification lies ahead; food delivery, express delivery and livestreaming all happen on platforms. Platforms raise the output efficiency of the individual worker, partly offsetting the Baumol effect by which services labour productivity lags manufacturing; the cost is the social security of flexible workers, stuck on whether ‘a platform counts as an employer’ — with multi-platform gigs, serving three or four platforms a day, the old employer-plus-individual contribution framework fails. The readout's separate mention of flexible-employment social security points precisely at this emerging socioeconomic problem.
Repairing household balance sheets is a one-shot clearing
The June Qiushi article formally discussed ‘repairing household balance sheets’ for the first time, and this episode splits it into two symmetrical halves. Liability side: from August 1, internet multi-platform lending is banned and borrowing-new-to-repay-old is sealed off, so the debts of the weakest-credit cohort will collectively turn bad at a very fast pace, and banks' short-term personal loan NPL ratios will jump — this is a deliberate one-time clearing, similar to the wholesale剥离 of the Big Four banks' bad loans in 2000. Asset side: the Politburo directly wrote ‘stabilise the real estate market’, with no modifier like ‘strive to’, in order to stop the continued shrinkage of housing prices, the largest asset, and thereby stabilise consumption expectations.
The hardest-hit old and small flats become yield assets first
In the dozen or so tier-1 and tier-2 cities surveyed by Sanlian Lifeweek, the ‘old and small’ flats in urban districts that fell the most over the past three years were the first to stabilise. The reason is the yield passively fallen into existence: after two and a half consecutive rounds of decline, the rent-to-price ratio reached about 2.6, already above long-term bank deposit yields. In cities where purchase restrictions can still be circumvented, investment demand beyond owner-occupation is beginning to appear; because government purchases of subsidised rental housing must satisfy three conditions at once — interior floor area, location and total price — the acquisition targets are almost all old and small flats. Judgment: housing price stabilisation does not start with new homes, but with old and small flats that have ‘already fallen into yield’.
The yen is the gate on dollar-asset liquidity
Why must global markets watch the yen? Japan is simultaneously a stable buyer of US Treasuries (foreign reserves + central bank), a major allocator of overseas assets (corporates + pension funds), and an exporter of global low-cost funding (the carry trade of borrowing yen at zero rates to buy dollar assets). All three channels top up dollar assets. But after the yen fell to a 40-year low, Japan's stop-loss actions all happen to tighten the top-up tap: to steady the exchange rate the central bank must sell Treasuries for dollars, and once it hikes, the carry trade must be unwound on a large scale, selling dollar assets and bringing money home. Both stop-loss actions depress dollar-asset liquidity, while letting the yen keep falling makes imports unaffordable — this is the unsolvable yen death loop.
Before the dangerous triangle tips, black swans come from outside
US Treasuries, the yen and US stocks form a dangerous triangle: the US needs to issue debt on a large scale in the coming months, and the winning bid rate must not be too high, or the cost of rolling over the debt spirals; at the same time Japan cannot reduce purchases or even sell Treasuries, or the demand side is missing a piece. Stability requires all three constraints to hold at once; if any one loosens, dollar assets go from broad gains into a stock-game. The candidate black swans this episode offers are all external: the yen (the master liquidity gate), the private debt accumulated by tech giants issuing bonds to build data centres (Oracle is the typical case), and the Strait of Hormuz — where commodities' capacity to absorb shocks is far worse than in the last crisis. The reason for a decline is never earnings themselves.
The logic of Chinese assets not eating external liquidity
Why can't the same liquidity framework directly explain Chinese assets? Three reasons. Foreign investors were already underweight Hong Kong and A-shares, so outflow pressure is small — foreign capital is incremental to us rather than a burden; the stabilisation fund had already sold more than 90% of its position before early July, recovering its bullets, and since then operates in reverse intraday: buying broad-based ETFs on overshoots and selling them back on rebounds, automatically smoothing gains and declines; add capital controls, and Chinese assets are hard to blow up instantly by dollar liquidity. The real uncertainty is internal: households still hold over ten trillion to over 30 trillion yuan in excess savings, and wherever that activates and flows, sustained incremental capital will follow. Don't transplant the logic of shorting dollar assets onto China unchanged.
The dollar cycle's final reckoning: from flooding to no blood left to draw
Recap the 23-25 grand cycle as one complete chain: 20-21 saw the largest flood of money in human history, with base money multiplied several times over; then a strong-dollar expectation was maintained; when rate hikes began to deliver, dollar assets attracted net global inflows; add regional conflict (Russia-Ukraine) drawing in safe-haven money, and the回流 accelerated. Now, with the increment exhausted, we are at the tail of the cycle. Numbers: US stocks rose from 30 trillion to 70 trillion, US Treasuries from 21 trillion to 40 trillion, global debt from 250 trillion to over 350 trillion. The last wave of money is very hard to earn: in a broad decline, almost no sub-category keeps rising.
The narrower and hotter the primary market, the more it looks like the cycle's end stage
The primary and secondary markets share the same tail logic: not broad gains across the board, but capital crowded into the intersection of AI × policy — robotics, embodied intelligence, world models, quantum computing, controlled nuclear fusion — with very fast rotation of hot spots. What is hot now is the narrowest AI: data centres, chips, semiconductor equipment. The judgment can be reversed: if US assets see a sharp decline and the AI bubble is passively deflated, the primary market may spread from narrow AI to broad AI — consumer, services, industrial and manufacturing directions that ‘can use AI and can make money’ will get funded before the ‘most imaginative’ directions.
In their own words · checked verbatim
You can't let Japan keep falling like this to sell Treasuries, and you don't want it to hike rates quickly to stabilise its own exchange rate; Japan also can't accept the yen continuing to depreciate — it's a very hard death loop to solve.
你既不能让日本这么跌下去 来卖美债 你又不希望它快速加息 稳定它自己的汇率 日本也不能接受它持续日元贬值下去 就这是个很难解的死循环
Black swans never start from earnings; black swans generally start from outside — every time a cycle reaches its end.
黑天鹅永远不是从业绩开始 黑天鹅一般都是从外部开始的 每一次周期到头的时候
Everyone says Treasuries will collapse; Treasuries won't collapse. At most, Treasury yields will see a period of big swings, because Treasuries, like our renminbi, are local-currency debt — at the very least it can print money to repay.
大家都说美债会崩 美债不会崩的 美债顶多就是收益率出现一段时间的大起大落 因为美债是跟我们的人民币一样 是本币债 就是它最少能印钱来还
When a broad decline occurs, almost no category keeps rising; in a fairly rapid broad decline, the last wave of money is very hard to earn.
在它出现普跌的时候 几乎不会出现有一个类别 持续上涨 在一个整个比较快速普跌的情况下 所以就最后这一波钱是很难赚的
At this scale and size, and having accumulated to this degree, a little blood probably won't solve the problem.
这个规模和体量 而且已经累积到这个程度了 应该靠一点血可能不太解决问题
Figures
| US 10-year Treasury yield (trading market) | about 4.7% | 45:12 |
| US 30-year Treasury yield (trading market) | above 5.2% | 45:20 |
| US federal fiscal revenue (federal level) | over 5 trillion dollars | 45:35 |
| Annual interest cost on US Treasuries (as of July) | about 1.45 trillion dollars | 45:45 |
| US defence spending | about 1.4 trillion dollars | 46:20 |
| Rent-to-price ratio of old and small flats (surveyed cities) | about 2.6, above long-term deposit yields | 27:23 |
| Total US stock market capitalisation | from about 30 trillion dollars to about 70 trillion dollars | 1:19:00 |
| US Treasury debt size | from about 21 trillion dollars to about 40 trillion dollars | 1:19:20 |
| Global debt size | from about 250 trillion dollars to over 350 trillion dollars | 1:20:03 |
Glossary
- Baumol effect
- Services labour productivity rises more slowly than manufacturing, but wages converge, pushing up overall costs.
- Multi-platform lending
- The same borrower simultaneously takes high-interest loans on multiple internet platforms, the main target of the August regulatory ban.
- Stabilisation fund
- State-team money that enters the market to steady indices, buying broad-based ETFs on declines and selling them back on rebounds to suppress volatility.
How to listen
Global asset allocators, traders and strategy researchers watching the turning point in dollar assets, and investors tracking Hong Kong stocks and the primary-market AI track.
If time is tight, the first 17 minutes on the Politburo meeting and social security can be fast-forwarded; the core judgment starts at the 43-minute mark with the yen.