Will the Bank of Japan's recent decision to sell off a massive amount of US Treasuries worth $63 billion trigger a fierce bull run?

The reason behind the sell-off is that the US-Japan interest rate differential has widened sharply, causing the foreign exchange hedging costs of holding US Treasuries to rise sharply, causing holders of these bonds to start suffering losses. In a US election year, it is possible to see US Treasury Secretary Yaron ask the Bank of Japan to absorb these bond sales through the Fed's FIMA repo facility to prevent US Treasury yields from rising sharply and causing financial market turmoil.

However, as US inflation then emerged, the Fed had to act and raised interest rates at the fastest pace since the 1980s. This is bad news for anyone holding US Treasuries. From 2021 to 2023, rising bond yields have caused the worst bond losses since the War of 1812. Faced with this situation, how should it be responded?

The Fed's approach to US financial institutions is correct, but foreign investors who bought large amounts of US Treasuries during the period of global currency appreciation will face challenges. Which country's banking system is most likely to be hit hard by the impact of the Fed's policies? Obviously, Japan's banking system will be one of them.

The latest news shows that Japan's fifth-largest bank will sell $63 billion worth of foreign bonds, most of which are U.S. Treasuries.

Even without a 0.25% interest rate cut to reduce hedging costs or a rise in bond prices to mitigate losses, Japanese banks still need to sell U.S. Treasuries to cope with the current situation. #MegadropLista #币安合约锦标赛