Kyla Scanlon

And so it seems like the same thing could be happening to Japan, where their prime minister has announced unfunded tax cuts, snap elections.

So there's a little bit of political risk.

And the bond market is not so happy about all of that.

It's not very fiscally responsible.

It's also a good lesson for the United States.

But there's also this question of the yen carry trade.

So because Japan has provided such cheap liquidity to the world for such a long time, a lot of people borrowed a bunch of yen in Japan because it was really cheap.

They converted those yens to dollars, they bought US stocks or bonds or whatever.

And then they pocketed the difference.

So they were able to borrow at a really low rate, get a high yield at a much higher rate, and then pocket the difference between those two.

But the thing is that that requires is that it requires, you know, Japan rates to stay near zero, which hasn't been happening.

And then it also requires the yen to stay pretty weak relative to the dollar.

And the yen has been going up a little bit too.

So that's everything that's like the pressure cooker that's happening in Japan.

And because rates are going up, people are unwinding their trade, which requires them to sell U.S.

assets and then convert it back into yen, pan off the loan.

And there was a columnist named Albert Edwards that said this creates a great sucking sound in U.S.

assets because everything's just being sucked out

And yeah, Japan bonds are really important to the functionality of the total U.S.

bond market, stock market, and it's kind of getting really delicate at the exact moment that the U.S.