🚨 URGENT: JAPAN TO SELL U.S. BONDS SOON?!?

🚨 URGENT: JAPAN TO SELL U.S. BONDS SOON?!?

All right. So, bear with me on this one. I’m going to try to explain it to the best of my ability. And this is just again, I’m kind of just thinking out loud. I’m sure a lot of you guys have heard the news. Uh I’ve been talking a little bit about it about Japan’s 30-year and 40-year bond uh continues to spike. And then now it has reached a level that is at a 20year high. Uh and this is putting their uh 40-year bond yields at 3.6%. I don’t know if you guys saw our 30-year bond uh hit highs of 5%. Um for those that do not understand, like you might be like, why why do we care about bonds? Uh pretty much it’s the rate in which our government is borrowing against. Uh so the higher the bond yield, the more expensive it is for our government to borrow money. And surprise surprise, our government’s going to need to refinance their debt. Every government needs, you know, their own version of of their debt. uh and therefore they want the lowest rate possible. Uh but the re reason that this is such a big issue for Japan is as I was doing a little bit more due diligence, what do you guys know about Japan? So, okay, Japan is at a 20-year high for its 40-year bond yield. Why do we care? It’s Japan. It’s not the US. Why does that impact us? Right? I agree. But then when you begin to look into, okay, well, first off, other markets failing are going to impact other markets, right? It’s it’s all a domino effect to some degree. I didn’t realize how big of a possible domino this can be. Now, do you guys remember when the US started this trade war with China, it was assumed that China began offloading a bunch of their bonds into our market, therefore causing US bonds to go up, right? They’re flooding our our markets with bonds, um, selling, liquidating, causing our bond yields to go up, making it more expensive for our government to borrow against, you know, that interest. And also, for those that do not know, the 10-year u bond yield is kind of like the benchmark for mortgage rates. And if it continues in the same direction, everyone is going to be taking out mortgages at 8% interest. Right now, we’re right around 7 12%. So, you might be asking, well, how does this affect me? Maybe it affects the government, but how does this affect me? It will affect everyone. If bond yields continue to go up, the the rate in which government and other agencies and businesses and you borrow against will all go up and therefore making it more expensive for everyone to borrow money. And what does that do? That slows down the economy. So now that we have that figured out, why do we care about Japan? This is why. So ranking the top 20 countries holding the most US debt. So US debt bonds, right? That’s because the the bonds are what the US borrows against. Japan. Japan is number one. Japan as of right now holds about 1.3 uh I’m sorry $1.13 trillion of US Treasury debt. And even as its own debt to GDP ratio runs at roughly 250%. And then when I began reading this, you know, you know, I was like, is this actually something I need to be concerned about? And this is from one of their um prime minister. I’m not even going to try to pronounce that name. So, one of Japan’s prime ministers who was elected last year um is saying that our country’s fiscal situation is undoubtedly extremely poor. He said worse than Greece. For those that do not know, the reason Greece is used as an example is that Greece um had this kind of like crisis where yeah, it’s yeah, it explains right here. um its debt crisis some 15 years ago even though its debt to GDP ratio was less than 120 uh 120%. Importantly however eight out of the 10 European uh euros uh in debt with Greece also had to issue were owed by foreign bond holders who had no skin in the game. So the whole idea is when one big domino falls or one domino falls other countries get impacted right because of Greece and the debt that they might own by other countries. So then I So then I started asking myself, okay, well, it’s not like Japan is going to sell and liquidate, you know, because obviously this would greatly impact our bond market. Would Japan ever consider liquidating their bond yields, right, their their debt against the US? Japanese finance minister says selling US bonds is uh selling US bonds a card on the table. Now again, this doesn’t mean that it’s going to happen. This does not mean that it that it has to happen. It just means that there’s uncertainty. And guess what? Our markets are of course not reacting just yet. Do you guys remember kind of that like flash crash we had because of the Japanese yen um a few months ago. That is just to show you how other markets can impact ours. I do agree it is a completely different market. It’s a completely different economy, but this market owns $1 trillion of US debt. What do you think would happen if they begin or in need of liquidating or selling some of US bonds? I just thought that it was information worth sharing. So, this is obviously something that I’m following very closely because I’m seeing how many people are so concerned about bond yields going up all over the world. It’s not just the US anymore. It’s not just Japan. It’s Italy, Spain, UK, France, Germany, Australia, the list goes on. This means that for every country in the way that they borrow is going up. This will mean that every country technically speaking should therefore then be slowing down. And that’s also the other big concern that’s going on with Japan is Japan out of the G7 summit was the worst performing country out of everyone. When it came down to their GDP report, they had their biggest slowdown. And again, it is at a point where it is expected to officially enter a recession in Q2 of 2025. But again, this is still developing. We’ll see if they are able to work their way out of it. I love following things like this because I love to see if we are catching it beforehand. It’s not that we can predict the future. We can’t, right? We don’t know if markets are actually going to drop in a negative way. All we know is that markets are not yet reacting. But we’re aware of this potential red flag. And if things do continue to get worse, we now kind of understand the domino effect. Okay, Japan might have to sell US debt. If they sell US debt, that will most likely cause bond yields to go up. This will make it more expensive for the US. Markets can fall. Um especially when we kind of cross that road. Something to take into consideration. If they figure out a solution, they don’t have to sell. Then again, we continue down this same road where markets can continue to push up. But remember, this is why Trump was so eager to be asking Jerome Pal, the head of the Federal Reserve, to start cutting interest rates. But as of right now, there’s no expectation that the Federal Reserve is going to start cutting interest rates until economic data supports it. So, we can’t So, you can pretend like this problem doesn’t exist or you can just acknowledge it and try to stay up to date. That’s the whole point of this is to take the information and take it for what it is. So you make a more informed and more calculated decision that again it’s not that you have to be scared. It’s not that you have to sell everything. That’s not the point of this. The point is that maybe you know I won’t go in as aggressive as I might have due to this uncertainty. Doesn’t mean that I have to change anything about my current investments. I hope that makes sense. So again, we’ll talk a little bit more about this during tomorrow’s live trading session if you want to tune on in. Second link in the description down below. It’s designed for complete beginners and especially in this market full of chaos. If you prefer to learn with structure, then that’s exactly what LPP is designed for. Second link in the description down below. I’ll see you tomorrow at market open for our live session. Take care of team.

Japanese Finance Minister Katsunobu Kato said Friday that the country’s $1.13 trillion in Treasury holdings were a “card on the table” in trade talks, The Associated Press.

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