The financial market trade feels like avoiding a flood of stones, each demanding constant surveillance and agility. As well as Bitcoin (BTC) and traditional risk assets stabilize after panic led by the Trump rate last week, disturbing movements arise in Japanese ties, throwing a key to the mixture.
The performance of the 30 -year -old Japanese government bonds increased to 2.88% on early Tuesday, the highest since 2004, registering an increase of almost 60 basic points in a week, according to the TrainingView data diagram platform.
The yield differential between the 30 and five -year -old bonds, which represent the premium demand of investors to maintain long ultra bonds for five -year bonds, has been extended to a maximum of almost two decades. The 10 -year yield has bounced approximately 30 basic points to 1.37% in a week, but remains well below the recent maximum of 1.59%.
These movements in ultra long bonds have generated the alarm in the community of investors, and rightly so, as Japan has long been an international creditor and the main holder of the United States Treasury notes. As of January, Japan had $ 1,079 billion in treasure bonds. In addition, for almost two decades, Japan has been an anchor for the low yields of the bonds, especially throughout the advanced world, which supports a greater risk take in financial markets.
Therefore, the continuous increase in Ultra Long JGB could encourage Japanese funds to sell international bond holdings and risk transport operations financed by yen and move capital back home. The resulting volatility in the US Treasury market. And the strengthening of Yen could increase to risk aversion.
“The Japanese have the world’s largest international investment position [and] They have a lot of money in several different markets. If that money begins to be repatriated to Japan, that would be clearly negative, “said Garry Evans on Monday, head of the global asset allocation in BCA Research, in an interview with CNBC.
Bitcoin could also be under pressure as he did in August last year when Yen’s first round was allegedly relaxed.
BTC is an asset with several appeals, ranging from emerging technology to a shelter to a value reserve. The narrative was strengthened last week, since the growing tariff war between the Trump and China administration led to wide risk aversion. BTC, however, fell less than the Nasdaq and the S&P 500.
The relative resilience has been acclaimed as a sign of the evolution of cryptocurrency as a low beta game of some, while a coverage of others, while effectively ignoring the fact that cryptocurrency has been a lower trend since the beginning of February, probably sets a commercial war that causes strong losses in the United States shares market last week.
So stay alert!
