Foreign governments are pulling money out of US debt while inflation from the Iran war forces the Fed to raise rates — bad for bond holders, the US budget, and anyone hoping for cheaper borrowing.

• Foreign holdings of US government debt fell sharply, with Canada, France and China selling about $90 billion between them in a single month.
• The Fed raised interest rates instead of cutting, because high oil prices have spread into the wider economy and pushed the 10-year yield back above 5%.
• Higher rates crush the value of bonds people already own, so more countries are selling rather than buying — a loop that feeds on itself.
• The UK has quietly become the second biggest foreign holder, but rising British inflation and record-high long-term borrowing costs there make it a shaky buyer.
• Hormuz is still effectively closed and Saudi pipelines were attacked, showing the US no longer controls Middle East energy flows no matter how many warships it sends.
• Treasury Secretary Bessent came away from talks with Beijing with nothing concrete, while China cut rare earth shipments to the US again as a reminder of who holds the leverage.

Outlook: More rate hikes look likely into next year, which means heavier interest costs for Washington, more foreign selling of US bonds, and continued pressure on the dollar's role in global trade.