Concerns about global liquidity increase amid U.S. and Japan bond auctions

According to PANews, a recent report from China International Capital Corporation (CICC) suggests that the simultaneous cooling of U.S. and Japan bond auctions, along with rising interest rates, could indicate a tightening of global liquidity. The report highlights that the insufficient liquidity of the yen, a key funding currency, could exacerbate the simultaneous decline of stocks, bonds, and the U.S. dollar.

The report further warns that, with the imminent approval of 'a big and beautiful bill' from U.S. President Donald Trump, the resolution of the U.S. debt ceiling problem could lead to a concentrated issuance of new U.S. debt by the Treasury between July and September. This could increase the risk of systemic liquidity shocks in the U.S. market. Consequently, the urgency for the Federal Reserve to implement quantitative easing and other balance sheet expansion policies to stabilize the market is growing.