🇯🇵 Japanese bonds spook Wall Street

Ajouté : 2026-05-23

[00:00:00]Okay, so we need to talk about Japanese government bonds. Hear me out because this could hit your portfolio hard. This week yields on Japanese government bonds have surged to levels not seen since 1997. This is as investors become more concerned about inflation, fiscal sustainability, and higher energy import costs. So, how does this affect you?

[00:00:20]Well, Japan is the world's largest foreign holder of US Treasuries. Also, the primary engine of the global carry trade. This is where investors borrow cheaply in yen and park that money in higher yielding assets like US stocks and bonds. Now, there's pressure on the Bank of Japan to raise rates and if that happens, the cheaper money becomes more expensive. Suddenly, investors who built positions using borrowed yen need to unwind them and fast. We saw a preview of this in 2024 when the carry trade partially unwound causing a sell-off.

[00:00:52]Now, yields are even higher and the Bank of Japan is expected to raise rates. So, investors are watching Japan very closely.