Originally Posted by
Tellafriend
It feels so dated. There is no mention of our beloved Treasuries Tellafriend.
The following is such an embarrassing demonstration of my fairly pedestrian understanding of finance but here we go cause I love this game right now more than the NFL.
Japan has been trying to do yield curve control. They still insist they want their rates to be near zero. (jPN inflation rate is very very low - but I digress)
* Japan prints yen.
* Japan takes yen with wet ink and buys their bonds. This bids up bond price and lowers the return (effective interest rate). Success!
* Japan’s yen (oops) declines in the world FX market cause they are printing like mad.
*
Japan sells lots of their US Treasuries to get US dollars which they then use to buy yen on the open market and bid up their price. Japan has been historically and famously one of the biggest buyers of our debt. That’s history. Now they are selling like a mofo.
You can actually see when they sell. Last Thursday at 4:30am if I recall you could see huge spikes everywhere. Made the news.
Japan is just an example. Everyone needs dollars as the milkshake guy points out. Everyone has Treasuries to sell to one degree or another. This puts pressure on the T Bill market and increases yield. Liquidity becomes a concern cause who da fuck is buying them except Daly or a Central Bank?
Bonds make the stock market look like a small poker home game. It’s a monster. We need to remind ourselves cause shorting TSLA and all that is more fun.