Is Japan really responsible for the plunge in US debt?
In the turmoil in the US bond market earlier this month, were Japanese institutions really the "pusher behind the scenes"?
According to preliminary data from the Japanese Ministry of Finance, private institutions including banks and pension funds sold $17.5 billion worth of long-term foreign bonds in the week ending April 4. Another $3.6 billion was sold the following week.
This total of more than $20 billion in sales is one of the largest two-week sell-offs since records began in 2005.
This round of selling came as global stock and bond markets fell into panic after Trump announced his tariff plan on April 2. In the four trading days that followed, the S&P 500 plunged 12%. The US Treasury market was hit hard, with 10-year Treasury yields soaring in the week of April 11, the largest increase since 2001.
Japan once said: It will not sell US debt to counter tariffs.
Previously, the market rumored that as the second largest foreign holder of US debt, Japan may sell US debt to counter tariffs.
On April 9, Wall Street News reported that Japan quickly spoke out amid market rumors and speculation.
Japanese Finance Minister Katsunobu Kato made it clear that it would not use its holdings of U.S. Treasuries as a tool for tariff retaliation:
"We manage our holdings of U.S. Treasuries in case there is a need for future exchange rate intervention."
In addition, according to the Global Times, Japanese Prime Minister Shigeru Ishiba said last week that Japan "does not intend to make major concessions and will not rush to reach an agreement" in tariff negotiations with the U.S. government.
"I don't think we should make major concessions in order to quickly end the negotiations," Shigeru Ishiba made clear in Congress, and he also ruled out the possibility of retaliatory tariffs on U.S. products.
