Japan Just Dumped $36B US Bonds and Why EU Might Be Next

Europe holds around $2 trillion of US Treasuries. Japan has long been one of the biggest holders too. If those two lenders buy less, the US government pays more to borrow, and so does everyone else who borrows in dollars. This week, two things point in that direction. The fight over Russian energy is straining the relationship between Washington and its European allies, and Japan, under pressure from a weak yen, has been trimming its holdings of American debt. Mr. Owe breaks down the argument between Washington and Europe over Russian energy, why allied trust matters for the bond market, what Japan is actually doing and why, and what it could mean for American households already under pressure. This is the latest in our ongoing series on bond markets, sanctions, and global debt. Catch up here: [link] [link] [link] IN THIS VIDEO • Treasury Secretary Scott Bessent's case against Europe on Russian energy imports, and Europe's response • Whether US purchases of Russian oil would actually raise global prices (the math says probably not much) • Why Russia has strong reasons to stay close to China regardless of any US energy deal • Why Europe doesn't need to sell Treasuries for its reduced buying to matter • Japan's quiet pullback from US debt: the real numbers, and the two reasons behind it (yield and currency risk) • The "K-shaped economy": why falling consumer confidence is hitting lower-income households hardest • How the AI buildout depends on cheap financing, and why that connects back to rising yields • Five things to watch in the coming weeks QUICK ANSWERS Is Europe selling US Treasuries because of the Russia dispute? Not dramatically, at least not yet. What matters more is whether Europe simply buys less at auctions going forward, which alone can push yields higher without any large-scale selling. Why is Japan reducing its US Treasury holdings? Two main reasons: Japanese government bond yields have risen substantially in recent years, making domestic bonds more attractive, and currency risk, since a strengthening yen could wipe out returns on dollar-denominated bonds. Japan has also been selling Treasuries to raise dollars and defend a weak yen. Would the US buying Russian energy lower global oil and diesel prices? The effect is likely small. The volumes involved are modest relative to global demand, and how much Russia can even deliver is limited by damaged refineries. What is the "K-shaped economy"? A pattern where higher-income households, whose spending depends on strong stock and home values, continue spending while lower-income households fall further behind, creating two very different economic experiences within the same country. QUESTION FOR YOU Do you think allies will keep buying US debt, or start looking for alternatives? And which country are you watching from? Tell me in the comments. SOURCES • NBC News, "Meet the Press," interview with Treasury Secretary Scott Bessent, Oct. 18, 2026 • U.S. Department of the Treasury, Treasury International Capital (TIC) System, Major Foreign Holders of Treasury Securities, August 2026 data (Japan: $1,103.9B → $1,068.3B, a $35.6 billion decline) • Bloomberg, "Sweden's Alecta Sold Most of Its US Treasuries Since Early 2025," Jan. 21, 2026, quoting CIO Pablo Bernengo • University of Michigan Surveys of Consumers, Preliminary October 2026 results (sentiment index 46.3, down from 48.1 in September; current conditions sub-index fell to a record-low 44.7) • Reuters / CNN, "Consumer sentiment falls to 5-month low... Knightley on the 'K-shaped' economy narrative," Oct. 9, 2026 • See our earlier videos on the diesel deal, Europe's response, the global debt spiral, and the AI bubble for sourcing on related claims Note: this video connects several fast-moving data points, including monthly Treasury holdings and consumer sentiment, which update regularly. Please check current data before drawing conclusions. One figure in the original script (a "6.7 point" September sentiment decline) could not be confirmed against official University of Michigan data in this search; the confirmed figures show October's reading at 46.3, down 1.8 points from September, with the current-conditions sub-index down 12.2% to a record low. Please verify this detail before publishing. This video is educational commentary on current events and markets, not financial, investment, or political advice. SUBSCRIBE Mr. Owe explains money, debt, and the global economy with simple stickman animation. New videos every day/or two: https://www.youtube.com/@MrOweExplains Educational content only. Not financial, investment, legal, or tax advice. #USTreasuries #BondMarket #GlobalEconomy