๐ช๏ธ ๐๐๐ฎ ๐ ๐๐ฅ๐๐ฃโ๐จ ๐๐๐จ๐๐๐ก ๐๐ง๐ค๐๐ก๐๐ข ๐พ๐ค๐ช๐ก๐ ๐๐ค ๐๐ก๐ค๐๐๐ก
The macroeconomic picture seems concerning, and Japan's economy could be the perfect trigger for disaster. Read my take on ๐ ๐๐ฅ๐๐ฃ's current situation and let me know what you think!
With inflation levels that central banks are facing issues to control, interest rates making it difficult to lower them, and high levels of government debt, (while employment remains solid but showing mixed signs) Japanโs debt crisis might no longer be a domestic concern and turning into a global risk.
๐ฏ๐ต With public debt now exceeding ๐ฎ๐ฑ๐ฌ% ๐ค๐ ๐๐ฟ๐, Japan faces rising interest costs, a shrinking economy (GDP contracted 0.7% in Q1), and a weakening yen.
โ ๏ธ ๐๐ฃ๐๐ก๐๐ฉ๐๐ค๐ฃ has risen to around 4%, surpassing the BOJ's target, causing consumer backlash and political pressure to reduce consumption tax. Policymakers face a dilemma: Raise rates to defend the yen and risk recessionโor resume bond buying and risk credibility.
๐ธ ๐๐๐ ๐๐๐ฃ ๐พ๐๐ง๐ง๐ฎ ๐๐ง๐๐๐: Potentially Explosive
For decades, the yen carry trade has quietly shaped global capital flows. Investors borrow yen at ultra-low rates (often <0.5%) and invest in higher-yielding assets abroad, profiting from interest rate differentials of 5โ10% annually.
But this strategy is fragile. A BOJ policy reversal or narrowing global rate differentials could trigger a rapid unwinding of carry positionsโleading to asset sell-offs, currency volatility, and systemic risk.
๐ ๐๐ก๐ค๐๐๐ก ๐๐๐ค๐๐ ๐๐ค๐ฉ๐๐ฃ๐ฉ๐๐๐ก
Japan holds 1.13 trillion in U.S. Treasuriesโthe largest foreign investor. Any reduction in these holdings could destabilize global bond markets, pushing up yields and borrowing costs worldwide.
The BOJโs pullback from long-term bond purchases has already triggered volatility. Add in trade tensions and tariff uncertainty, and the global bond market is becoming a more risky play.
๐ ๐๐๐๐ฉ ๐๐ค ๐ฎ๐ค๐ช ๐ฉ๐๐๐ฃ๐ ? ๐ฟ๐ค ๐ฎ๐ค๐ช ๐ฉ๐๐๐ฃ๐ ๐ ๐๐ฅ๐๐ฃ'๐จ ๐๐๐จ๐๐๐ก ๐จ๐๐ฉ๐ช๐๐ฉ๐๐ค๐ฃ ๐๐ฃ๐ ๐ฉ๐๐ ๐๐ก๐ค๐๐๐ก ๐๐ญ๐ฅ๐ค๐จ๐ช๐ง๐ ๐ฉ๐ค ๐ฉ๐๐ ๐๐๐ฃ ๐พ๐๐ง๐ง๐ฎ ๐๐ง๐๐๐ ๐ง๐๐ฅ๐ง๐๐จ๐๐ฃ๐ฉ ๐ ๐ง๐๐๐ก ๐ง๐๐จ๐ ๐ฉ๐ค ๐๐ก๐ค๐๐๐ก ๐ข๐๐ง๐ ๐๐ฉ๐จ? ๐๐ค๐ฌ ๐๐ง๐ ๐ฎ๐ค๐ช ๐ฅ๐ค๐จ๐๐ฉ๐๐ค๐ฃ๐๐ฃ๐ ๐ฎ๐ค๐ช๐ง ๐ฅ๐ค๐ง๐ฉ๐๐ค๐ก๐๐ค?
Pedro
$USDJPY$JPN225$SPX500... Show More
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