For decades, the global financial architecture functioned as an orderly infrastructure: a corridor of stability in which the free flow of capital aimed at maximising returns in an environment of low geopolitical risk. That world looks very different today.

If, historically, US sovereign debt has been regarded as the ultimate “safe harbour”, that same asset now increasingly resembles a fuse waiting to be lit.

The era in which the US set the rules of the game on the back of the dollar’s uncontested hegemony since the Second World War may be giving way to a genuinely multipolar reality. The transformation of US Treasury bonds – long-dated US government securities – from safe haven into geopolitical weapon is set to be one of the most interesting dynamics to watch in 2026, a year in which confidence in these instruments may erode further.

With public debt now above $38 trillion (124% of GDP), the United States has understood, more than ever, that financial sovereignty cannot be taken for granted and that the stability of its debt increasingly depends on major foreign investors, who hold roughly a quarter of negotiable US public debt in the form of Treasuries. Chief among them is Japan, the largest single holder of US government bonds, with a stock of around $1.2 trillion at the end of 2025. Tokyo faces a strategic paradox: continue to underpin the debt of its key ally or offload US Treasuries to shore up the yen. The latter move would fuel an appreciation of the Japanese currency, as selling US bonds would entail converting the dollars raised into yen on the market.

Yet this is not merely a currency story; it is primarily a public debt story.

The complete analysis is available in the latest edition of Future Warfare Magazine (FWMag 2/2026). Log in here and read it for free!

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