Ray Dalio says the Treasury market could face a new pressure point as China cuts its U.S. debt exposure and Japan looks to recover some of the money it has lent Washington.

“The Chinese don’t want to continue to accumulate,” Dalio told Bloomberg Television Tuesday. Japan has “lent a lot of money” and now wants much of it back, he said.

Dalio said foreign capital supplies almost a third of the money the U.S. borrows. With Washington still issuing heavily, any pullback from overseas buyers could put more upward pressure on yields. The 10-year Treasury is already around 5.3%, near levels last seen in 2002.

That has weighed on long-dated bonds. The iShares 20+ Year Treasury Bond ETF (NASDAQ:TLT) hit a 52-week low last week.

China Has Been Cutting Treasuries for Years

China’s reported Treasury holdings have fallen from roughly $1.3 trillion in 2013 to about $618 billion in July 2026, including a nearly $78 billion decline over the past year, Treasury data shows.

“When you have a debtor-creditor relationship and you have an adversary relationship, that’s a very difficult dynamic,” Dalio said.

American Hartford Gold President Max Baecker said Sunday that central-bank buying helped drive much of gold’s rally last year as countries diversified their reserves into the metal.

Japan Has Its Own Reasons to Bring Money Home

Japan remains the largest foreign holder of Treasuries, with about $1.1 trillion in July. That was down $12.8 billion from June.

Higher Japanese bond yields may have made keeping money at home more attractive, while Finance Ministry data indicate Tokyo likely sold some foreign securities to help fund yen intervention.

Dalio Says Sources of Savings Are Tightening

Dalio warned in June that the U.S. was “past the point of no return” on debt and repeated Tuesday that a debt crisis could arrive within three years.

“It’s not just the fiscal deficit of the government, it is also the AI and other large expenditures,” Dalio said. Foreign lenders are “starting to get squeezed,” he added.

“So where does that saving come from? That comes from those sources which are tightening.”

Dalio said that leaves more borrowing chasing a shrinking pool of savings, a supply-demand imbalance that is pushing interest rates up.

Prediction Traders Expect the Fed to Hold

Treasury Secretary Scott Bessent said Monday that growth and spending restraint could start “bending the curve” on federal borrowing.

Polymarket traders put an 82% chance on the Fed holding rates steady in October, versus 18% for another 25-basis-point hike.

If traders are right and the Fed holds, Dalio’s argument suggests the bigger question for long-term yields may be how much debt Washington sells and who shows up to buy it.

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