Something big is unfolding — and most traders aren’t ready.
The Bank of Japan is stepping away from decades of Yield Curve Control. That chapter is closing.
To protect the yen and steady its bond market, Japan now needs real domestic demand for JGBs. The BoJ can’t carry the load alone anymore.
What happens next?
Japanese institutions start pulling capital back home by unloading foreign assets:
• Global stocks
• Overseas bonds
• ETFs
And the elephant in the room?
🇯🇵 Japan holds over $1.1T in U.S. Treasuries.
Those positions made sense when yields were near zero and carry trades were king. That environment is gone.
Now the flow flips:
➡️ Treasuries sold
➡️ Capital repatriated
➡️ Global liquidity tightens
First dominoes to fall:
• Global bond markets
• U.S. funding costs
• Risk assets worldwide
For decades, Japan suppressed global yields by exporting capital. When the world’s largest creditor reverses course, it’s never subtle.
I said Japan would move markets in 2025 — this is just the beginning.
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