Japan Warns Bessent With Major Treasury Dump As Global Investors Reject Loans To US Companies

Japan Warns Bessent With Major Treasury Dump As Global Investors Reject Loans To US Companies

All right guys, so the US trade war just got worse. Now we have said it at least a hundred times by now. Countries in the world do not like to get bullied and they will be pushed back. We must reemphasize a trade deficit is not some grand conspiracy out there to get the US economy. It simply means consumers and companies they recognize value. So they import more stuff into the country. But the rhetoric has not changed at all. They allowed our beautiful USA to be laughed at, scorned, and taken advantage of by everybody. We were ripped off on trade by nations all over the world, both friend and foe. And often times, a friend was far worse on trade than the foe. But those days are over. You’re at the start of something very, very big. You’re going to see that very soon now. And now we have a US ally pushing back on the United States. The Japanese team has been heading back and forth to Washington to lobby down the tariffs. However, there’s been no progress at all. There’s simply no clear direction. Not only that, the US wants Japan to stop managing their currency. Oh yes, there’s also the issue about joining Besson’s plan to contain China as well to block Chinese exports from the Japanese market, but that will invite retaliation from Beijing. Just their cheapmaker revenue from China alone is enormous. Last year, Japanese companies sold 2.2 trillion yen worth of machines to China and that’s almost 50% of their total revenue. Now, China cutting off these sales is one thing, but if Japan doesn’t have the leverage to push back, we can expect Besson to keep trying his luck and order Japan to preemptively cut cheapmaker sales to Beijing. And we should be under no illusions here. Trump will keep pushing and lowballing Japan with a lousy deal. The US realizes they can’t contain China alone, so they will need to form a coalition to even stand a chance and that will most definitely Japan’s chip industry, especially at a time when the US wants to reshaw production back home. And if Japan cuts away Chinese revenue, they will easily lag behind the Americans over the next 5 to 10 years. But domestically, Japan is also facing an economic crisis. The Bank of Japan was supposed to be raising interest rates at a time when the rest of the world is lowering theirs. They have no choice because their inflation is the highest of the entire G7. US inflation is at 2.5%. While Japan is way higher at 3.2%. But they simply can’t hike rates to contain it now. And this is all thanks to Trump’s trade war and the level of uncertainty. If the terrorists destroy Japanese exports, hiking rates might crush their industries further. So what Japan needs is clarity. They simply need to know what US trade policy has in store for them. They need a clear direction of what’s next. And that’s why Japan just gave the US a warning. They are aiming for a deal in June that avoids punishing China and strengthening their currency to save the dollar. Japan’s finance minister Kato just reminded Basson that their holdings of US bonds could always get weaponized. In other words, Japan could start dumping their massive reserves of US debt to mess up the treasury market. He mentioned how their treasury holdings is a card that can be used. Japan is well aware of that financial nuclear button. In addition to that, Kato said that Japan doesn’t hold US debt to specifically support the US. And if there’s no advantage to holding US debt, especially if trade with the United States drop, we could simply sell them off in the open market. That’s the implicit threat. Well, if Trump wants to be transactional, Japan is going to give him transactional. And in the latest update, Japan is still the largest foreign holder of US debt. that holdings is over $1.1 trillion worth of treasuries. That is an enormous amount and more than 30% than what China even holds. The common push back is that Japan can’t afford to sell their holdings of US debt and if they do, the bond value will collapse and there’s nowhere else to park their money. It’s the same argument Besson just used trying to convince himself why China can’t dump their bond holdings that you know if they started selling treasuries uh they would uh you know they’d have an effect on the price uh but more importantly more importantly uh they accumulate dollars and what are they going to do with the dollars so if they sell treasuries then they would have to buy R&B and it would strengthen their currency and they’ve been doing just the opposite. They’ve had a weak R&B or Jan won the uh policy. So, it really served no purpose for them to weaponize treasuries. If you saw them trying to weaponize treasuries, how does the Treasury Secretary respond? Look, we we have a big toolkit. We we do buybacks. uh the the Federal Reserve I I think if treasuries hit a certain level or if the Federal Reserve believed that foreign rival uh were weaponizing the US government bond market or attempting to destabilize it for political gain. I I am sure that we would do something in conjunction with each other. But Besson is highly mistaken here. He believes the only avenue to spend treasury proceeds is to buy back your own currency. The R&B for China and the yen for Japan. But there are many other avenues to spend the proceeds from the treasury sales. Japan could always buy euro bonds instead of buying back the yen. And this in fact could actually devalue the yen, allowing their exports to be even more competitive. Now the euro has outperformed the dollar by over 5%. This is good for Japanese capital flows because it won’t really affect the yen directly. Furthermore, the EU debt markets, they’re going to deepen. More bonds will be sold. So, there will be sufficient depth for Japan to really invest in. In addition, holding more euros isn’t a bad idea. Japan will need to find new trading partners and Europe will become a good candidate to replace some of the US demand. So, holding some euros instead of dollars will be good for bilateral trade. Now what Bessant has is a lack of imagination. Japan can absolutely get rid of their dollar holdings if they want to. They could use the bond sales to subsidize their own industries and this would put the money into productive use and help their own companies become even more productive. After all, the big powers like the US and China, everyone is actively subsidizing their own industries. It’s just how the modern economy works today. Japan already has a plan to provide 10 trillion yen worth of subsidies to their domestic chip industries and this is equivalent to $65 billion worth. Tokyo can always do the same thing again. And the mechanism is quite simple. Japan can simply set off the treasuries to receive dollars. That’s step one. Now step two is to convert the dollars to yen. And step three is where the magic happens. you get a Bank of Japan to issue a ton of JGB bonds to absorb any excess liquidity, any excess yen in the market. So now the Japanese government can spend a sterilized yen on domestic investments without worrying about the yen strengthening. It’s quite straightforward and I’m very sure Besson understands this. This is the problem with trying to reduce trade with the world. Suddenly there’s fewer need to hold US dollar assets. The US is now an industrial competitor and countries around the world they will seek to subsidize their own industries. Now Washington knows this and that’s why they need the world to desperately hold on to their holdings of US bonds. But what Trump is doing is making things impossible. He is forcing countries to choose. And despite what Trump would have us believe, the US is not just dependent on foreign imports, it’s very much dependent on foreign money as well. According to Apollo, foreigners hold $19 trillion in US stocks, 7 trillion in treasuries, and 5 trillion in corporate debt. Focus on just the debt portion. Foreigners hold 30% of all outstanding debt, both government and private. Now, imagine the devastation should countries decide to jump ship. And it doesn’t matter how they spend the money. Maybe they use it to subsidize the industries. It really doesn’t matter. The net effect is money leaving the US which opens up a whole can of worms. Besson forgot one simple fact about the hyper financialized US economy. When you decide to reduce your trade deficit, it means the world earns fewer dollars. And when they decide not to recycle money back into the US, this is a problem. It creates what is known as a capital account deficit. money could leave the US markets in droves and that would crash the dollar and reduce bond values or spike rates higher. And that’s exactly what happened just a few weeks ago. And because the US refuses to solve the trade war with China, global investors are very frustrated. Even Bessant himself doesn’t know when the disaster will end. There’s a very good chance that the US makes a deal with China. Do you see that happening within a couple of weeks, a couple of months? What’s your timing, Mr. Secretary? Well, again, Maria, as I said, that the Chinese need to deescalate these high tariffs because there is the equivalent of an embargo and the Chinese business model is built on selling cheap goods to the US. They sell us about five times more than we sell them. So, uh, you know, their factories are closing down as we speak. We’re going into uh the holiday season. Uh orders are placed for that now. So uh if if those orders aren’t placed, it could be devastating for the Chinese. It’s so frustrating. We are now back to strategic uncertainty. Besson still believes Chinese industries will totally collapse. But here’s the problem. The longer this drags on, the higher the odds of investors giving American assets the cold shoulder. And we aren’t joking here. The economy is halfway into a recession and lending money to the US is getting really risky. Everyone is afraid of a default. And now private US companies are in trouble. Corporate America is facing a funding squeeze. According to Goldman, investors outside the US are net sellers of US corporate debt in the first half of April. Not buyers. They’re now sellers. And what do you know? The selling came after Trump announced the reciprocal tariffs letting to US companies is now very unattractive because of the fundamentals breaking down. Input cost across the board will be heading up by at least 10% and I’m being very generous here. Meanwhile, revenue will be crashing. The US consumer is tapped out while foreigners won’t be buying American products. It’s another double whmy for foreign lenders. And make no mistake, selling now means money managers are likely taking on a loss. They are dumping because rates might continue to heat up or companies themselves might default. Lending to US companies used to be a very good deal. But Trump’s trade policies just did a massive U-turn on the entire situation. And this also creates a very serious domino effect for corporate debt. Now since January even high-grade corporate bond spreads have flown to the moon thanks to the terrorists quality companies now have to borrow money at 100 basis points more than the US Treasury. So if Besson borrows money at 5% the best companies in the US will have to pay at least 6% or more to access capital and lower tier companies will have to pay 9 10 or even 11%. And with investors starting to leave, this threatens to spike the chart even higher in the months to come. Ironically, this increases the odds of a debt default. So, we can see a convergence of storms coming together that makes dollar assets really risky. Even if companies get paid more than treasury bonds, the currency conversion could devastate their returns. It would be a horrible sight to behold. And once again, we are left with a set realization that everything hinges on the tariff policy. Nothing really makes sense anymore. And I hope you don’t think a settlement will come anytime soon. So many things are happening, so many great things. And we won’t let countries rip us off anymore. You know, a lot of people like to talk about tariffs. Well, tariffs is exactly what they were doing for us. You know, when when you want to defend that, uh they’re a beautiful thing for us. If you can use them, if you can get away with using them, it’s going to make us very rich and we’ll be paying off debt. We’ll be lowering your taxes very substantially because so much money will be taken in that we’ll be able to lower your taxes even beyond the tax cut that you’re going to be getting hopefully with the the big beautiful bill. Well, let me highlight the risk of the tariff wall dragging on. The longer this continues, the more frustrated fall owners will get and the more bonds they will dump. Nearly 80% of all their debt holdings are long-term nominals. And these are 10 to 30-year bonds. And if these bonds get dumped, everything from mortgage loans to personal credit could explode even higher. But worst of all, future demand will get compromised. More Treasury sales will get shifted to shorter-term nodes, which will keep rates elevated. So, I hope Trump really knows what he’s doing because the US bond market isn’t out of the woods yet. Another demand shock could be coming very soon as we approach a recession. A very deadly combination. But let me know what you think. Will Japan really dump their bond holdings? And will global investors stop lending to US companies as well? Let me know in the comments below. Stay safe. Be sure to smash the like button and subscribe as we navigate through this crazy times.

💵 Invest With FREE Stocks:
Singapore Viewers – http://bit.ly/longbridge_SeanFoo
US & International – https://start.moomoo.com/00mFkE

📍Buy Gold & Silver At A Discount: https://bit.ly/IPMBullion
– Just use the code: SEANFOO at checkout

In a stunning move, Japan just warned Bessent that they could always dump or weaponize their US Treasury holdings. Will the U.S. back down in negotiations? Meanwhile, global investors are moving to sell off US corporate debt as the economy approaches a looming recession.

📍Buy Gold & Silver At A Discount: https://bit.ly/IPMBullion
– Just use the code: SEANFOO at checkout

Follow me on X(Twitter) here: https://twitter.com/SeanFooGold thank you!

✅ Timestamps & Chapters:
0:00 Japan Pivots Against The U.S.
2:57 Japan Pressures Bessent With US Debt Dump
6:24 Threat Of Global Treasury Sell-Off
9:09 Investors Are Refusing US Corporate Debt
12:17 Tariff War To Worsen

Subscribe to my channel where we dive deeper into the world of gold, silver & investing:
🔴 Subscribe: https://bit.ly/3kzabfN

Helpful videos for gold investing:
– Start With Silver Or Go Straight For Gold?: https://youtu.be/rDy3xOuC0j8
– How Much Gold To Own: https://youtu.be/pnildJSdmnY
– How High Can Gold Prices Go: https://youtu.be/aaHTVACqGYg

Learn how to buy physical gold:
👑 https://bit.ly/3D76Lqn

Here’s how to buy physical silver:
🪙 https://bit.ly/3rlsXJ3

Please note: I will earn a small commission from affiliate links at no additional cost to you.

Disclaimer:

The information presented on this channel is for news, education, and entertainment purposes only. The information does not constitute an offer or solicitation to buy or sell any investment product(s) or investment strategies, or a substitute for professional investment advice. It does not take into account your specific investment objectives, financial situation or needs. I am not a financial advisor or a licensed investment professional. Please consult with your financial advisor before following any investment strategies discussed herein.