Recently, while monitoring international capital flow data, I noticed some very interesting changes.

In October this year, there was a significant divergence in government bond holdings. China drastically reduced its holdings of U.S. Treasuries by $11.8 billion, bringing the total to $688.7 billion—this is the lowest point since the 2008 financial crisis. Canada was even more aggressive, directly dumping $56.7 billion. In contrast, Japan and the UK went against the trend, increasing their holdings by $10.7 billion and $13.2 billion, respectively.

This phenomenon illustrates the issue well. Behind the movements of central banks in various countries is actually a reassessment of the global financial landscape.

**The foundation of trust is shaking**

The once prestigious label of U.S. Treasury bonds is indeed fading. Federal debt has surpassed $38 trillion, and annual interest payments are almost catching up to defense spending. This figure looks a bit scary.

China's reduction in holdings is not a spontaneous decision. Looking back at history, the holdings reached as high as $1.3 trillion in 2011, and have now shrunk by almost half. This long-term adjustment is not a coincidence, but is based on a judgment of risk.

Last year's government shutdown (lasting 43 days) prompted many to rethink - if even the U.S. government can "shut down", how solid can the credit foundation of national debt be? This question is not merely alarmist.

Central banks around the world are voting with their feet. Behind the changes in holdings is a subtle adjustment in global financial allocations, which is also an important reference for us to understand the future direction of the market.