DarthTrader
Diamond Member
- Mar 29, 2022
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- #1
Japan is a principle exporter of inflation right now. Their policy to cap the JGB 10YR Yield to .25% has meant that for the past few months the yield has remained .246% without so much as a pip off.
To do this Japan is devaluing their currency such that today it hit $135 per Yen and lost 17% in 3 months. An astronomical devaluation.
This drives Yen into dollars or euros seeking yield (Carry trade) which in turn causes foreign interest rates to go down.
It is presumed that at some point the Japan Central Bank runs out of fire power and collapses.
The sign for this is when foreign bind yields spike and the Yen begins to rise WHILE the JGB 10Y yield rises.
Recently this has happened and signals that the Japanese Central bank is about to collapse. They've run out of collateral.
Tomorrow will be very telling. Especially if Feds hike 50 or 75 but bond yields continue to rise and Yen strengthens.
To do this Japan is devaluing their currency such that today it hit $135 per Yen and lost 17% in 3 months. An astronomical devaluation.
This drives Yen into dollars or euros seeking yield (Carry trade) which in turn causes foreign interest rates to go down.
It is presumed that at some point the Japan Central Bank runs out of fire power and collapses.
The sign for this is when foreign bind yields spike and the Yen begins to rise WHILE the JGB 10Y yield rises.
Recently this has happened and signals that the Japanese Central bank is about to collapse. They've run out of collateral.
Tomorrow will be very telling. Especially if Feds hike 50 or 75 but bond yields continue to rise and Yen strengthens.
