Panoramic View of Four Major Assets: Exclusive Advantages of US Hegemony and Trading Turning Point Signals

Huitong Network May 27 — In the era of weaponized demand, the United States builds its economic hegemony on the pillars of US dollar political premium, capital siphoning via US Treasuries, the safe-haven status of US equities, and dominance in consumption demand. However, signals of a turning point in this hegemony are gradually surfacing, such as de-dollarization, declining demand for US Treasuries, and hidden risks in US equities.

In traditional macro models, the US Dollar Index (DXY) is driven mainly by the interest rate spread between the Federal Reserve and other central banks (such as the US-Germany yield spread) and global risk appetite. But after the tariff wars and geopolitical conflicts, the dollar has shown a unique “political premium”:

It’s worth noting that if US core allies in Europe or Asia seek substantial independence in security (for example, if Europe achieves a milestone in defense autonomy), or if the non-US bloc successfully establishes a completely dollar-bypassing, sufficiently liquid bilateral/multilateral settlement mechanism for physical commodities, this asymmetry will be weakened.

Once allies are no longer willing to sacrifice “markets” for the “security” the US offers, America’s ability to impose “access taxes” will decline; the dollar’s political premium will be diluted, DXY will revert to cyclical behavior, and in the context of the current US-Iran conflict, US control over Middle Eastern markets is being weakened.

US Treasuries: The World’s Only “Super Capital Vacuum”

This means that even when the US abuses financial sanctions (e.g., freezing foreign reserves), the world’s main pools of wealthy funds and surplus nations (even potential adversaries) have no alternative asset pools with the same depth or liquidity as Treasuries, forcing them to keep their enormous funds locked in the US bond market.

The US government can simultaneously implement rule-breaking tariff policies and leverage geopolitics to ensure that allies (such as Japan, Korea, Europe) continue to buy US Treasuries, securing the privilege of low-cost financing.

But when foreign central banks start increasing gold and physical assets and reducing their allocations to Treasuries, this framework may break. Coincidentally, long-term US Treasuries (10Y/30Y) have seen their auction bid-to-cover ratios plummet recently — a sign of diminishing appeal.

Should countries holding US Treasuries collectively sell due to dollar shortages or in retaliation, the yield curve will steepen, causing US government interest expenses to skyrocket.

US Equities: The Global Beta Premium “Safe Haven”

US stock markets continue to absorb global profits while maintaining valuation monopolies, reaching their highest weighting in global equity indices in 50 years, supported mainly by powerful macro capital flows, not just fundamentals.

Often, fundamentals and capital flows are disconnected. When the US imposes tariffs and trade barriers on the world, overseas multinationals and domestic manufacturers see profit expectations hit.



This dynamic allows US equities to sustain robust inflows despite high rates and lofty valuations.

However, if anti-globalization sentiment leads to harsh breakups of tech giants or extreme tax policies, or if tariff-induced inflation spirals out of control — forcing the Fed to raise real rates high enough to choke the real economy — the game changes.

The strength of US equities heavily relies on “nowhere else to go” for global capital. Once domestic political strife erodes the US competitive or property rights environment, ending this “black hole” appeal, US equities may face a brutal mean reversion of decades-long valuation bubbles.

Commodities: Returning from “Financial Attributes” to “Physical Control”

In commodities, the US lacks absolute resource monopolies (especially for certain key minerals and rare earths), but does have the world’s largest, most powerful end-consumer demand.

By weaponizing this “demand,” the US can forcibly reshape global supply chains.



Russia maintained four years of fighting capacity heavily sanctioned, thanks to oil exports, proving that control over physical assets far outweighs the digital numbers on Wall Street.

Summary:

Currently, the US builds economic hegemony on the dollar, Treasuries, equities, and consumption demand. In times of geopolitical and trade friction, the dollar strengthens, US Treasuries absorb global safe-haven funds, US equities attract ongoing foreign inflows, and commodities are driven by US demand.

But the inflection point for this hegemony is emerging — with allies seeking autonomy, a push for de-dollarization, weakening appetite for Treasuries, rising concerns about US equities, and the growing value of physical assets.