Turkey has nearly emptied its US Treasury holdings as the Iran war drives up oil prices and forces foreign bondholders into losses, a bad sign for the US bond market and the dollar.

• Turkey cut its US bond holdings from $16 billion to $1.8 billion as Turkish inflation hit 32% and energy imports got expensive.
• Japan and China are each sitting on over $40 billion in losses on US bonds as long-term yields hit levels last seen before the 2008 crash.
• Oil prices are up over 50% because of the Iran conflict, pushing US producer inflation to 6% and squeezing companies and consumers.
• The US national debt hit $39 trillion, and interest payments now cost over $1 trillion a year, more than the military budget.
• If oil keeps rising, the Fed will be forced to hike rates, which would push bond yields higher and trigger more countries to sell.

Outlook: If the Iran conflict drags on, expect more foreign governments to dump US bonds, higher inflation, and pressure on the Fed to raise rates.