Japan Could Shake Markets Next Week!!

While everyone is watching the escalation between the United States and Iran, the real problem may be hidden behind this event.

Bank of Japan (BoJ) issued a new economic report, and it appears the situation is much worse than expected.

According to the points in the text:
• Around 600 billion dollars of foreign assets have been sold.
• And pressures may increase in the coming period.

The reason is that Japan may be forced to abandon its Yield Curve Control (Yield Curve Control) policy that has lasted for decades, in an attempt to support the Japanese yen.

The idea presented here:
If Japan starts selling foreign assets in large quantities, it could affect several global markets such as:
• Stocks
• US Dollar
• Bonds
• Metals
• Digital currencies

One of the largest foreign assets Japan owns is:
US Treasury bonds.
• Japan is the largest foreign holder of US debt
• And holds more than 1.1 trillion dollars in US Treasury bonds.

These bonds were purchased during a period when:
• Interest rates in Japan were near zero
• The yen was weak
• And the Carry Trade strategy was widespread globally.

But now the equation is beginning to change:
• Returns on Japanese bonds have increased
• While investing in US bonds after hedging has become less attractive.

Therefore, we may witness a reversal in this strategy.

At the same time, geopolitical tensions and rising oil prices are adding pressure to markets, with some capital flows moving toward safe-haven assets (Risk-Off)

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