The US is losing control of its finances as China builds an alternative to the dollar, bad news for US bonds and good news for Beijing.

• US inflation keeps eating the dollar's value, and a recent $42 billion Treasury auction flopped, pushing the 10-year yield near 4.7% — the highest since 2007.
• Interest on the US debt has hit a record $1.4 trillion a year and is growing fast, trapping Washington as it keeps spending to win the AI race against China.
• China's central bank made it official policy to take the yuan global, signing trade deals, loans, and gold settlement through Hong Kong to cut its reliance on the dollar.
• Deutsche Bank became the first non-Chinese bank cleared to settle yuan transactions inside Europe, letting EU-China trade bypass the dollar entirely.
• Europe is turning toward China after Washington dumped euros to protect the dollar, a move that angered Brussels and sped up the search for alternatives.

Outlook: Expect more EU and Chinese trade to shift out of dollars, keeping pressure on US bonds and pushing borrowing costs higher.