trillion

Japan#Japan has finally shown its hand. In a move that sent shockwaves through global markets, Finance Minister Katsunobu Kato went live on national television and dropped a bombshell — Japan’s $1.13 trillion#Trillion in US Treasury holdings is now officially on the table.

When asked if Japan would ever use its massive stake in US debt as leverage during trade talks with the Trump#TRUMP administration, Kato didn’t flinch.

“It does exist as a card,” he said — calmly, deliberately. And just like that, a chill swept through Wall Street.

This wasn’t a misstep or a mistranslation. Japan, historically tight-lipped and cautious when it comes to even hinting at touching US debt, just flashed the nuclear option. Why now? Simple: Trump’s been playing hardball since April, throwing around “reciprocal tariffs” like confetti. Japan is done sitting quietly in the corner.

Let’s rewind. That first tariff threat already shook the US markets. Bond yields jumped, sell-offs began, and panic started to brew. Trump pressed pause for 90 days — but the warning lights were flashing. Loud and clear.

Japan’s message: Don’t test us.

Kato’s comment wasn’t random. It came right after Japan’s lead trade negotiator, Ryosei Akazawa, landed back in Tokyo following heated meetings in Washington with Treasury Secretary Scott Bessent and other top US officials. The flashpoints? Cars. Natural gas. Agriculture. The usual battlegrounds. Trump wants Japan to give in — fast.

Japan might play ball on some energy or farm purchases. But not without a price. And based on Kato’s tone, patience is wearing thin.

Analysts are already calling it what it is. Nicholas Smith, Chief Strategist at CLSA, said it straight:

“This is a street fight now. If you’ve got a powerful weapon, not showing it would be naive. You don’t have to use it — just letting them know you could is enough.”

And here's the twist — this isn’t just about Japan anymore. China’s watching. And China holds even more US debt. If Beijing follows Tokyo’s lead, it’s game over for the bond market. The two biggest holders of US Treasuries hinting at coordinated pressure? That’s not a warning — that’s a threat.

Japan’s Prime Minister has already called Trump’s trade moves a “national crisis.” And for someone like Kato — known for diplomacy, not drama — to go public like this? It’s a clear escalation.

Jesper Koll of Monex Group summed it up:

“When Japan’s finance minister openly talks about its US Treasury holdings, it’s not just a warning. It’s a message: We’re done playing nice.”

Talks between Tokyo and Washington heat up again in May. A deal could be on the table by June. But here’s what’s different now:

Japan isn’t just asking for respect.

They’re warning: Push us one more time
, and we torch the bond market.$