Japanese long-term bond yields are exploding to levels unseen since decades, turning global markets into a ticking time bomb ā and the US is right in the crosshairs.
40-year Japanese government bonds surged to a record 3.689% last week before settling slightly, but still nearly 70 basis points higher since January. With 30- and 20-year yields also spiking, borrowing costs are skyrocketing and investor demand for these ultra-long bonds is plummeting.
Why does this matter? Because Japanās massive holdings of US stocks and debt are on the verge of a major shakeout. Analysts warn that if yields climb any higher, Japanese investors could pull a tsunami of capital out of the US ā a move that could unleash global financial chaos.
Michael Gayed calls Japan a āticking time bomb,ā while Societe Generaleās Albert Edwards predicts a āglobal financial market Armageddon,ā with US tech stocks especially vulnerable.
The carry trade ā where investors borrow cheap yen to fund higher-yielding foreign assets ā is unraveling fast. Last Augustās Bank of Japan rate hike sparked a brutal unwind that sent markets crashing. This could be just the start of a repeat.
The fallout wonāt be slow or subtle. With trillions at stake, the global financial system braces for impact.
šØ This is the storm warning every investor needs to hear.
Are you ready?
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