The bond market just sent Washington a warning shot. Here’s how it works

A sell-off in bonds threatens to destabilize the entire economy.

Japan holds the largest amount of U.S. debt, followed by China at roughly $759 billion .

Countries like China , Japan , or the United Kingdom own a massive chunk of the national debt.

When countries like China buy US bonds, they’re essentially lending money to the government.

An inverted yield curve has been one of the most reliable predictors of recession.

Foreign purchases of U.S. Treasuries help keep demand for dollars high and interest rates stable.

But to critics like J.D. Vance , this reliance on foreign debt exposes the country to deeper economic and geopolitical risks.

Vance has long warned about the risk of a “bond market death spiral” He believes such a crisis could be politically devastating for President Trump .

Former Treasury Secretary Larry Summers called the bond market pattern “highly unusual” and warned of a possible financial crisis.

Trump urged Americans to “be cool” as markets wobbled and yields climbed.