Japan Is About to Pull $1 Trillion Out of the US Bond Market
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Why are Japanese investors critical to US Treasury bonds? Learn how their Fiduciary Mandate creates a massive ripple effect in global markets. This breakdown examines the mechanics behind the $819 billion in Foreign Direct Investment flowing into the US economy. We map out the Grand Cascade of financial plumbing, connecting central bank policy directly to the reality of current market conditions. Whether you are an investor or student of macroeconomics, understanding these flows is essential to navigating today’s complex financial landscape. We also analyze the specific challenges posed by duration risk and rising yields. By looking at the concept of Portfolio Defense, you will gain a clearer picture of how institutional capital reacts to interest rate volatility and why these specific bond market movements matter for the broader economy.
12 Comments
Good news for crypto!
True, the yen carry trade is over. Plus, why would the entirely rational Japanese want to invest in a rogue nation ruled by a madman?
Any investor has the right to exit a market when they deem so. Japan was scrude by the US following the Plaza Accord. Now Japan will most likely harm the US.
Czyli tak szybko Japończycy nie wycofają tego 1 bln obligacji USA.
Well said May🎉
Great analysis as always.
And, what about China? Will the Chinese buy Japanese bonds instead of US? Or just keep buying gold?
The one issue that should be noted is along with Japan, China and many more countries that are exiting from the USA treasures market is the amount of froud,waste and corruption that is taking place with NO prosecution along with all of the insider stock trading by our corrupt politicians that become multi million airs while in office and the lack of credibility they possess. If you were in charge of investing your countries capital into a government agency outside of your own country would you invest and trust the way the USA IS BEING RUN????? WITH ALL OF THE UNCHECKED CORRUPTION .BY CURRENT MANAGEMENT.
Japan's bond mark collapse is the 1st domino to trigeer the USA bond market collapse as more countries stop buyinhg the US Bonds and then the US dollar will collapse and the US Empire will collapse and the US military will be chased out of most countries and the USA Babylon empire will finally die. Thank You Jesus. Buy and hold silver and gold and secure whatever you need to live outside of the coming one world cashless digital beast system. Peace and Maranatha.
Why all the bother about Japan exiting us bonds? Nvidia can handily just mop up the bonds by swapping their shares for bonds. If Nvidia holds USD 2t of bonds, investors will be super confident that no matter what Nvidia will be worth at least usd2t 🤔 ultra rich companies that are enriched by listing on Wall Street should bear some of the financial burdens of the host nation, no?
Al
You do not know when the bonds were purchased in Jap China etc.. The early 2020 had US 30 yr bonds issued at quarter % yield now they are at 5% that means the old bonds in early 20's are sitting on 35 to 45 percent loss on face value. The US banks are getting around this by a rule of hold to maturity to cover taking a loss re BIS rules… BUT foreign governments do not have this option. Sure the Jap can sell BUT will they incur a notable loss probably They probably get rid of old issues at a loss since they take the view that US Bond rates are not going to return to early 2020 levels any time soon. ISSUE Is Jap's have held bonds for many years so you do not know the average yield across all their holdings THEY have 10 year as well They have a currency problem as well and they need to raise US dollars to pay for elevated oil price which seem to be around for a number of future months. Eurodollar market is in trouble that is another reason Jap and China etc are selling BUT this whole problem is across Asia South Korea Indonesia and India..