Recently, the sharp decline in the US stock market appears to be driven by two parallel risk factors.

**Tariff conflicts heighten risk aversion sentiment**

First, the issue of Greenland's acquisition has led to increased tariff expectations, directly dragging down US stocks. Market estimates suggest this factor accounts for about 40% of today's decline. What’s truly concerning isn’t the tariff figures themselves, but the potential deterioration of US-Europe relations—everyone knows that if a trade war truly escalates, it will become very complicated later on.

What might happen next? The market presents several possibilities: the most optimistic scenario (50% probability) is that Trump abandons the idea of acquiring Greenland and shifts to other demands, with both the US and Europe stepping back; secondly, a favorable ruling from the federal court on the tariff law could temporarily contain this wave of impact, though the timing remains uncertain (25% probability); the worst-case scenario (25%) is that Europe outright refuses to compromise, leading to short-term escalation, but in the long run, a peaceful resolution is still possible.

**Japan’s debt crisis is the real ticking time bomb**

But all these are surface-level issues. The real driver shaking global financial markets is Japan’s debt problem spilling over worldwide.

Recently, the market has realized a risk that was previously severely underestimated: Japan could evolve from a purely "internal bond dilemma" into a "threat to the global interest rate system." It sounds exaggerated, but the logic is quite clear.

The Bank of Japan(BOJ) is now caught in a classic dilemma—almost no options:

If it raises interest rates to save the yen, Japanese government bond yields will continue to fall, banks’ collateral will be at risk of default, carry trades will be forced to unwind, and narrowing interest rate spreads will cause liquidity to tighten immediately; if it expands asset purchases to protect the bond market, more yen will flood into the market, causing the yen to lose control, potentially breaking through the psychological threshold of 160.

In reality, Japan is effectively using a "curve rescue" approach—selling Japanese bonds through the Ministry of Finance, then coordinating large traders to buy yen and Japanese bonds in the market, aiming to stabilize both currency and bond prices simultaneously. This is one of the reasons why US bond yields have been rising steadily.

**Key spillover effects**

It’s important to clarify: Japan isn’t already engaging in large-scale, systematic selling of US Treasuries, but the market is beginning to trade on the "possibility of such forced actions." Yet, this expectation alone is enough to push US Treasury yields higher.

Once the yen continues to hit new lows and Japanese bonds weaken further, US Treasury yields will almost certainly follow upward. This, in turn, will put pressure on global risk assets—including stocks and digital assets. So rather than saying US stocks are falling, it’s more accurate to say global liquidity is tightening, and the US Treasury market—the "price discovery center"—is repricing a decade-level risk.