Michael Kamali , Doctor of Business Economics candidate
Fiduciary Financial Advisor for California Doctors & Dentists | Helping You Cut Taxes, Grow Wealth, and Protect Everything You’ve Worked So Hard to Build Without the Stress, Confusion, or Sales Pitch. MBA, ChFC, ChE
Part 1 of 3
🌍 A Shift in Global Capital Power
Over the past few years, the BRICS countries (Brazil, Russia, India, China, and South Africa) have made concerted efforts to confront the use of the U.S. dollar as the world’s reserve currency. It may have started as political rhetoric, but it has now evolved into a structural change, particularly in the manner in which BRICS countries are engaging with the U.S. bond market.
This shift, commonly referred to as de-dollarization, is more than a symbolic divergence from Western financial norms. It directly threatens the U.S.’s long-standing fiscal advantages by reducing foreign demand for U.S. Treasury securities, which for decades have been the backbone of global reserve portfolios.
💰 Why It Matters: U.S. Bond Market Under Pressure
Foreign investors, huge sovereign buyers such as China, have long played a crucial role in helping to keep U.S. borrowing costs low. However, as BRICS countries diversify their reserve holdings and develop parallel financial systems, they are withdrawing from Treasuries and paying more for trade in local or regional currencies.
As I demonstrate in my upcoming dissertation, Bond Market Under Pressure: How BRICS De-Dollarization Threatens U.S. Treasury Demand, the consequences are already visible:
· Lower bid-to-cover ratios in bond auctions
· Rising long-term yields, increasing the U.S. government’s cost of debt
· Reduced effectiveness of Federal Reserve policy tools
· Portfolio volatility among institutional investors who once relied on the safety of Treasuries
📚 Theoretical Lens: Stakeholder Theory
To frame these disruptions, I apply Stakeholder Theory, initially introduced by Edward Freeman (1984). In this macro-financial context, we observe that institutions such as the U.S. Treasury, the Federal Reserve, and institutional investors are not passive observers; they are stakeholders reacting to external shocks driven by global power realignment.
Each of these stakeholders faces unique risks and decision pressures:
· The Treasury now must offer higher yields to attract buyers and is more reliant on domestic purchasers or allies.
· The Federal Reserve finds it harder to manage interest rates as foreign capital retreats.
· Institutional investors, such as pension funds and asset managers, are adjusting their portfolios to protect against rising volatility and potential yield curve inversion.
🔍 Key Findings from My Research
Through a Rapid Evidence Assessment (REA) of over ten peer-reviewed studies and macroeconomic reports, I identified the following key theme:
BRICS de-dollarization is accelerating a capital realignment that weakens the U.S.’s ability to issue safe assets at low cost.
This finding is supported by researchers such as Todorova et al. (2024), who identify increasing auction volatility, and Mosharrafa (2024), who frames BRICS’ financial strategy as a direct macro-prudential response to U.S. sanctions and interest rate cycles.
📊 Visualizing the Impact
📊 1. BRICS Holding of U.S. Treasuries (2015- 2025)
Description:
This graph highlights the significant decline in U.S. Treasury BRICS membership, particularly since 2018. The decline in dollar-denominated assets, as countries such as China and Russia diversify their reserves into gold, euros, and local currencies, is indicative of both financial and political estrangement. This tendency directly undermines one of the main pillars of debt financing in the United States.
📉 2. Treasury Auctions Bid-to-Cover Ratios (2015- 2025)
Description:
The decrease in bid-to-cover ratios indicates a decline in interest and turnout at U.S. Treasury auctions. The withdrawal of BRICS countries from Treasury purchases implies that the U.S. must offer better yields to lure investors. This increases the cost of long-term borrowing and introduces volatility in the issuance of debt, especially in longer maturities.
📈 3. 10-Year Treasury Yield Curve (2015- 2025)
Description:
The increase in the yield on the 10-year Treasury notes is an indication of elevated market risk and uncertainty amongst investors. The de-dollarization process led by BRICS will decrease global demand, thereby driving yields higher and putting the financial conditions of U.S. households, corporations, and the government in a tight spot. The Federal Reserve’s power to influence these rates wanes, making it more challenging for the central bank to respond with monetary policy.
📣 Why This Matters to You
If you’re a policy advisor, financial strategist, or global investor, these shifts aren’t abstract; they’re operational.
· For the Treasury, rising yields mean higher national debt servicing costs.
· For the Fed, it limits the power of traditional monetary levers.
· For investment firms, the traditional “safe asset” framework is becoming less reliable.
In sum, BRICS isn’t just building financial autonomy; it’s reshaping how risk is priced, how capital flows, and how the U.S. must think about its global economic future.
💬 Let’s Talk
🔗 I’ll be sharing more findings from my research over the next few weeks. If you’re in central banking, sovereign investing, or macro policy, I’d love to connect and exchange ideas.
📅 Do you believe the U.S. is adapting fast enough to this monetary realignment? Please feel free to drop a comment or reach out; I welcome all perspectives.
#BRICS #BondMarket #DeDollarization #StakeholderTheory #USBonds #ICBMSI2025 #FederalReserve #MonetaryPolicy #FinancialStrategy #Macroeconomics #SovereignDebt
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