Analysis of the Current State of US Finance: Policies, Markets, and Risks

Recently, the US financial sector has seen a flurry of activity, with a series of policy announcements and market fluctuations garnering global attention. From the passage of the Genius Act to the fluctuations in the US dollar exchange rate, to debt issues and disputes in the fintech sector, the US financial system is undergoing complex changes and challenges.

Policy-Driven Adjustments to the Financial Landscape

The Genius Act, passed by the US, ostensibly regulates digital currency, but in reality carries far-reaching strategic implications. The US fiscal operations have long relied on the issuance of Treasury bonds, with foreign governments being the largest holders of US debt. Japan increased its holdings of US Treasury bonds by $500 million in May, bringing its holdings to $1.135 trillion; the UK increased its holdings by $1.7 billion to $809.4 billion, ranking second. This concentrated foreign debt holding model presents strategic vulnerabilities at critical moments. If foreign creditors reduce their holdings, the US Treasury market will experience significant volatility. The Genius Act aims to establish a regulatory framework for digital stablecoins and encourage stablecoin issuers to purchase US Treasury bonds. Take Tether, for example. In the first quarter of 2025, its holdings of U.S. Treasuries exceeded $120 billion, making it the world's 19th-largest buyer of U.S. Treasury bonds. This suggests that the United States is attempting to establish a decentralized, "compliant" buyer system through stablecoins, reclaiming "debt sovereignty," reducing its reliance on foreign sovereign creditors, and extending the dollar's hegemony into the digital financial era.

Economic Signals in Market Fluctuations

At the market level, the dollar exchange rate has attracted considerable attention. Since Trump took office, his intention to devalue the dollar has been clear. The dollar index fell by over 10% in the first half of 2025, and as of July 18, it had fallen by 10.3% from its January 13 high. The combined effects of the dollar's devaluation and tariffs have significantly increased the price of imported goods from the United States, significantly impacting the U.S. trade landscape. Meanwhile, the U.S. stock market has performed relatively strongly. As of July 18, the S&P 500 index had risen 11.8% from April 1, reaching a new record high. The yield on the 10-year U.S. Treasury bond fell from 4.61% on May 21 to 4.42% on July 18, well below its January peak of 4.79%. However, there are clear signs of slowing U.S. economic growth, with the Chicago Fed's National Financial Conditions Index falling to its lowest level in more than three years. While this suggests ample financing, it also reflects potential economic instability.

Hidden Risks Under the Shadow of Debt

The U.S. debt problem is becoming increasingly severe. The Treasury Department stated that due to low cash reserves and reduced future cash inflows, net borrowing will exceed $1 trillion in the third quarter of 2025, far higher than the $554 billion forecast in April. Net borrowing is expected to reach $590 billion in the fourth quarter. Bridgewater Associates founder Ray Dalio likened the U.S. debt crisis to an "economic heart attack," noting that U.S. spending is 40% higher than income, and debt interest payments are squeezing purchasing power, approaching the critical point where new debt issuance is necessary to cover debt service, potentially triggering a financial shock and systemic collapse. Goldman Sachs also warned that the biggest medium- to long-term risk facing the United States is fiscal sustainability. The growth of the national debt and interest payments could push up interest rates, tighten the financial environment, and drag down economic growth.

New Disputes in Fintech

In the fintech sector, a fierce battle over consumer financial data has quietly begun. JPMorgan Chase has informed several fintech startups that it will charge them fees for access to bank customer data starting in September. Previously, banks were prohibited from charging such fees to third parties under the Biden administration, but the rules were revised after the Trump administration relaxed regulations. This move has sparked widespread outrage among small fintech companies, who have filed a lawsuit demanding the reinstatement of the original rules. This dispute reflects the conflicting interests between fintech development and traditional financial institutions and foreshadows the impact of adjustments to US financial regulatory policies on the industry landscape.

In summary, the US financial sector presents a complex landscape across multiple dimensions, including policy, market, debt, and industry competition. The future direction of the US financial market will depend not only on domestic policy adjustments but also on the interplay of multiple factors, including the global economic situation and geopolitics. This uncertainty warrants continued attention.