The Bank Of Japan Has Doomed Global Bonds – QE Is Back!

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You know I think old habits really die Hard and we have the bank of Japan back Doing QE putting up money once again to Buy bonds and you know things are really Bad in Japan when even the Federal Reserve is doing a much better job than The boj now the boj there on borrowed Time and is reverting to printing Money Crew order has effectively lit a fuse on The global bond market because sooner or Later he will have the pivot guys and This is truly a case of stubbornness and A refusal to surrender to reality right You cannot bring your way to Prosperity Urbanomics is not working and the Markets are not stupid so the bank of Japan is holding on to their yield curve Control policy while sacrificing the Japanese Yen they are refusing to hike Rates and they are still going to leave Their Benchmark rate at a negative 0.1 Percent and push down their 10-year Yield to zero percent and that means if You buy the 10-year jgbs you're going to Be an absolute down because the boj Wants you to enjoy zero yield and the Market knows that the Yen immediately Crashed versus the dollar before Rebounding but this devaluation of the Japanese Yen likely isn't over yet and The big problem with Japan's delay that I think is that interest rates are Rising across the world and when rates Rise it is adding a lot of pressure to

The economy people are afraid to borrow Spending comes down and companies can't Grow as fast and leave Japan wants to Suddenly hike rates it could trigger a Bond crisis and collapse Global Bond Markets Japan's pivot could be the straw That breaks the camel's back and the Problem with the boj is their refusal to See the situation on the ground they Want more inflation in Japan because Somehow just somehow they can't see Inflation staying above two percent in a Sustainable matter over the coming years And this is dangerous because Japan's Core inflation has already reached of 41 Year high it is now at incredible four Percent and it is causing a cost of Living crisis for people in the country And this is what happens when you rely On mmt when you believe you can print Your way out of a recession and Stimulate artificial growth and it is The same situation as the United States Back in 2020 when the Federal Reserve Brought trillions of bonds to push down Rates to near zero right we all remember That and now we have an inflation held Like no other and in fact Kuroda Mentioned something very disturbing Before he flew on this jet to Davos Right he said I think yield curve Control is entirely sustainable and this Tells us that he's going to keep pumping Money to the system because he wants to

See wage growth in Japan he wants to see Companies pay their workers more because Japan's wage growth is horrible and we Can see that in 2020 wages in Japan were The same two decades back in the 2000s While salaries in the rest of the world Are scaling for inflation and according To the boj okay this is a problem Because consumers have no money to spend But because the boj is trying to Manipulate interest rates because they Are pumping so much money to the system Investors with half a brain they are Leaving the Japanese markets right they Aren't buying bonds they aren't buying Stocks they are putting their money out Of the system and if anything they are Betting against the bank of Japan now While investors decide to leave Japan it Crashes demand for the Yen and pushes Prices up for the local Japanese people Right this means an inflation nightmare For people in Japan because of a Currency devaluation Japan is a net Important of food Fuel and commodities So they need to swap their Yen for Dollars to buy them unless the Yen Collapses they can buy fewer inputs for Their economy now the boj is causing Higher inflation well above two percent Not really because of keeping rates low But because they are lighting the Yen on Fire and this is the big issue I have With just printing money and asking

Companies to raise wages Japan has been Calling for wage increase of at least Three percent and yes the big Corporations they are bowing down to his Request but let's get real for a moment If wages go up by three percent but the Yen has collapsed by 10 or 11 to the Dollar you might still be experiencing a Lower standard of living so let's try to Understand Japan's battle for higher Inflation right how is Japan going to Stimulate the economy because their new Approach is truly terrifying you know I Used to think the Federal Reserve wasn't Operating in reality but compared to the Bog I have to give Jerome power a 5 star Review compared to Corona Powell is Doing a fantastic job now this horror Show comes in two parts guys firstly the Boj is going to keep buying an unlimited Amount of bonds to keep the 10-year jgb Yield at zero percent and if you look at The 10-year yield it is at 0.4 percent So the boj is going to print up as much Money as possible to fight against Market forces who are selling to buy up Bonds and this is called yield curve Control this is not genuine demand for The Japanese bonds because the market Knows this the boj they have become the Buyer of Last Resort for the Japanese Government in fact if there wasn't a bog At all you would probably be well above Three or even five percent because

Japan's economy is starting to shrink no One in the right mind wants to lend Money to a country that is Contracting Without demanding a higher yield and That's why we are saying that the bank Of Japan the boj they are trying to defy Gravity but wait until you hear the Second part guys the boj is trying to Get the private sector to help out with Their yield curve control and the idea Is simple the boj wants to offer ultra Low interest rates to commercial Banks To get them to borrow cheap money and Then use the cheap money to buy Japanese Bonds to push down the yield and not Even a Federal Reserve does this the Bill eojis is actually offering free Money right free cash to the banks to Use money in the private sector to Artificially generate demand for Japanese bonds so if the Commercial Bank Can borrow money from the boj at like 0.1 percent for 10 years and by the 10-year jgb at 0.4 yield they have made A risk-free trade of 0.3 percent Courtesy of coroda and we need to see How ridiculous this is this is not Organic demand for Japanese bonds the Big Banks aren't using their own money It is still coming from the boj and on Top of that you are giving them free Profit while expanding the money supply Right so just imagine if you're a Foreign investor and you'll see all the

Shenanigans you'll definitely want to Run away from Japan and if you think it Can't get worse it definitely could we Have Kuroda saying I won't rule out the Possibility of negative rates being Applied to the fund Supply operation and That means the boj might not charge any Interest rates to the big Banks and Might even pay them money from the boj To push down born yields ladies and Gentlemen this is next level QE and we Have reached the economic Twilight Zone And this is why I cannot take the Japanese economy seriously and many Other investors they are betting against The bank of Japan they know the Japanese Bond markets is finished and it's just a Matter of time before Japan surrenders To inflation we have UBS at shoulders Piling on more short bets on the jgb's Understanding that the boj will Capital It they understand it's just a waiting Game because the longer crota refuses to Raise rates the worse the pivot will be It's like a spring guys the further you Compress it the higher the bounce will Be when you let it go right Japan might Be able to keep its Bond use down right Now with money printing but the market Will punish the Yen for it what Japan is Trying to do is gamble with the world The boj is betting with the market that They can entice their own Banks to keep Rates down for Forever by pumping them

Full of money but the markets will win They always win because now the interest Rate differential between Japanese bonds And Western bonds is getting worse the Federal Reserve is going to keep hiking At least for a few more quarters and This will cost investors to dump Japanese bonds for U.S treasuries now in Fact it's even better to dump now Because the boj will clean up the mess And buy back the bonds to keep the Yields low right and this is why Japan Will likely pivot sooner or later Because the Yen will continue to get Hammered and local inflation will keep Soaring and the big blind spot that the Boj isn't saying is that the Yen isn't Very valuable the yen is not the US Dollar there isn't a consistent demand For it to be playing such games Countries around the world need dollars Because the majority of imports and Commodities are still priced in dollars And over 60 percent of foreign debt is Also denominated in dollars so there is A constant stream for demand for the Greenback but the yen is very different If the jgbs are yielding nothing then The yen is collapsing there isn't any Incentive to whole Yen investors will Sell it away making the collets even Worse and this is where things get Really scary for Global bonds the thing About Japanese investors is that they

Hold a lot of foreign bonds like U.S Treasuries and there are also tons of Traders who are part of the Yen carry Trade essentially they borrow the Japanese Yen at cheap rates sell it for Dollars and then buy the us treasuries Because the yield is so much higher so Just imagine guys what happens when a Boj decides to Pivot and Hike rates These two pillars that are supporting U.S bonds and other foreign bonds will Collapse suddenly the Yen will start Going up and that will cause Japanese Investors Japanese Banks and Pension Funds to pull money away from American Bonds because the yen is appreciating And they need yen to settle the Obligations we are going to see money Flow away from foreign bonds now even Back in 2021 Japan held over 2.7 Trillion dollars worth of long-term Foreign bonds plus if the Yen carry Trade is over less money will flow to U.S treasuries and that could Spike use Up even further this is really scary News because we don't know what the Tipping Point will be for the coming Recession will the boj's pivot cause a Sovereign debt crisis or will it be Triggered by a banking collect because All the institutions that leveraged up On treasuries or jgbs right we really Don't know because everything right now Is one big black box we can't see what's

Below the surface on a balance sheet of Banks and Pension funds right all we can Say is that the boj they are playing With fire not just with their own Currency but the global bond market as Well so I think inflation is going to be An ongoing problem with Japan because Once again guys you cannot print your Way to Prosperity Japan is really caught In a nasty position if the Japanese Economy really collapses due to Rising Rates now they also have an inflation Problem that just won't disappear Overnight right even the Japanese Government is afraid of stagflation we Could very well happen but the boj's Policies just don't make any sense even If you get wages up by printing money The yen is still devalued so purchasing Power is still compromised and I think Japan is learning a hard lesson that you Can't throw money at every problem they Have a fertility crisis and an Immigration problem which are all Contributing to a shrinking economy Right you cannot conduct new human Beings by keeping interest rates low and Printing money the only thing that you Create is that inflation crisis so let Me know what you think in the comments Below will Japan keep printing money or Would they pivot eventually and start Hiking rates to save the Yen let me know In the comments below stay safe be sure

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