When Trump sneezes in Washington, the Japanese bond market catches a cold immediately! The yield on 30-year government bonds surged to a new high of 3.215%, and even the finance minister shouting calm into a megaphone couldn't stop it.
The cause was Trump directly dismissing Federal Reserve Governor Cook, raising concerns that dollar policy would become more 'hawkish', causing U.S. bond yields to jump by 5 basis points, which the Japanese bond market quickly followed. However, Japan's debt repayment budget is as high as 32 trillion yen next year, putting immense pressure on it.
What’s more troublesome is that Japan holds $2 trillion in U.S. bond assets, and now with skyrocketing yields, investors are all chasing U.S. bonds, leaving Japanese long-term bonds neglected like 'leftover men'.
Although Cook refused to step down, the market is already buzzing: Will the Federal Reserve become Trump’s 'yes-man'? Now, not only are Japanese bonds 'off the charts' in blood pressure, Shihoko Shigeno’s fiscal debates have turned into a soap opera. Securities firms bluntly stated: if the Federal Reserve continues to mess around, the global bond market will have to work overtime too!
Is international news more exciting than binge-watching dramas? Follow Sister Hui for the next scoop: 'When the British Prime Minister sneezes, the Indian rupee kneels!'