Global money is moving from Western financial centers to Hong Kong, which is bad for US bond markets and the dollar's dominance.

• Hong Kong has passed Switzerland as the world's biggest cross-border wealth hub, with money pouring in from China and foreign investors chasing Chinese IPOs.
• This hurts the US because Swiss banks used to funnel money into US government bonds, and that pipeline is now drying up.
• Foreign holdings of US bonds have dropped to the lowest level since 2012, with another big drop since the Iran war started.
• Wealthy investors worldwide are scared of having their money frozen like Russia's assets in Switzerland, so they are moving to Hong Kong for safety.
• Treasury Secretary Bessent is calling rising prices "transitory," the same word used before the last inflation surge, while the deficit runs at double his own target.

Outlook: Money will likely keep flowing from the West to China, putting more pressure on US bonds and raising the risk of a Fed rate hike.