US Financial Resilience Tested by Iran War

The US Treasury market is facing increased pressure as the war with Iran continues to escalate. The yield on 30-year US Treasuries rose above 5.3% in August, a level last seen in 2007. This could lead to higher borrowing costs for the government due to energy price hikes and inflationary pressures.

Ray Dalio recently warned that the US debt crisis could reach a serious point within roughly three years if demand for US debt declines. He advised investors to reduce their exposure to government bonds and allocate around 10-15% of their portfolios to gold, with some holding Bitcoin as a hedge.

The situation is further complicated by Japan's efforts to defend its currency against the dollar. Tokyo has spent $96.5 billion in less than a month to support the yen, but the effects have been short-lived and may impact US Treasury market dynamics.