Katie Martin

And of course, if you get inflation, that means that it's bad for bonds and that pulls up the bond yields and pulls up borrowing costs too.

Now, where this goes next is, that's the sort of pertinent question, I guess.

And there've always been people who've been looking for a crisis in the Japanese bond market because it's so big.

You know, Japanese debt to GDP is what, 200%, something like that.

It's always been enormous.

So there've been people who've been calling for some sort of reckoning in that market for a really long time, and it simply hasn't happened.

It is plausible that we get a serious problem now.

And what that serious problem would look like is potentially that yields blast higher, right?

We get a really meaningful drop in Japanese government bond prices, yields blast higher.

We get something that looks like the Liz Trust moment in the UK government bond market in 2022.

And that's, first of all, leaves a lot of important Japanese investors with big losses, but also means that all of a sudden,

Yields in Japan are so high that why would you as a Japanese life insurance company bother investing in the US with all the problems that you can see in the treasuries market?

Why would you bother with the French government bond market or German or UK or whatever?

Currently, exactly that.

They go overseas because they want to get those higher yields.

Why would they bother if you can get the higher yields at home?

There is potential for that to be disruptive.

But I think it's sort of slightly kind of disaster hunting to think that that is necessarily what is around the corner.

Most likely, Japan is blessed with very smart policymakers.

They know what they're doing.