It seems that each trading in financial markets avoids a barrage of stones that demand a certain degree of vigilance and agility. Just as Bitcoin (BTC) and traditional risky assets stabilize after Trump’s tariff-driven panic last week, a volatile move in Japan’s bonds throws a spanner into the mix.
According to data source charting platform TradingView, the Japanese government’s 30-year bond yield rose to 2.88% from Tuesday, the highest since 2004, marking a rise of around 60 basis points in a week.
The difference in yields on 30- and 5-year bonds represents 30- and 5-year bonds that require you to hold ultra-long bonds over five-year bonds, spreading to almost two-year heights. The 10-year yield bounced back about 30 basis points to 1.37% in a week, well below its recent high of 1.59%.
These ultra-long bond movements have sparked vigilance in the investor community, and of course, Japan has long been an international creditor and a top holder for the US Treasury Department. As of January, Japan owns $1.079 trillion in the Ministry of Finance. Furthermore, for almost 20 years, Japan has been an anchor for low bond yields, particularly across the advanced world, helping to increase risk taking in financial markets.
Therefore, a very long, continuous increase in JGB could encourage Japanese funds, sell risk-on-carry transactions with international bond holdings and yen funds, and return capital to its homeland. The resulting US Treasury volatility and strengthening the yen could increase risk aversion.
“The Japanese have the world’s largest international investment position (and) they have a lot of money in a variety of different markets. If that money starts to be repatriated to Japan, it’s clearly negative,” Garry Evans, chief strategist of global asset allocation at BCA Research, said on Monday in an interview with CNBC.
Bitcoin could also be under pressure, as the first round of the yen was rolled up last August.
BTC is an asset with several charms, from emerging technology to heaven and valuable stores. The story was reinforced last week as the escalating tariff war between the Trump administration and China led to widespread risk aversion. However, BTC has dropped below the Nasdaq and S&P 500.
Relative resilience has been hailed as a sign of cryptocurrency evolution, as a low beta play by others by hedges, but it could effectively ignore the fact that cryptocurrencies have been low since early February and price the trade war that caused a sudden loss in the US market last week.
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