2026 Lunatic Fringe - Market and Trade Chat

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Some bonds can lose value based on current interest rates if not held to maturity. USTs are Tier 1 same as cash, but TRADE at a discount or premium depending on economic conditions.
 
All bonds trade, prices go up inversely with the yields. You can however, just hold most to maturity and they pay you the principal back. Which differs from stocks of course.

My coworker does some loan underwriting and had him try to price a 30-year with a good credit score. Nearly 7.5% today
 
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Voodoo said:
All bonds trade, prices go up inversely with the yields. You can however, just hold most to maturity and they pay you the principal back. Which differs from stocks of course.

My coworker does some loan underwriting and had him try to price a 30-year with a good credit score. Nearly 7.5% today
Click to expand...
6.5% Navy Federal
 
Off the cuff, I think the US is buying YEN to help Japan stay afloat.

Nations do buy each others debt.
 
The sensible voice in the room.



According to their theory, Washington feared that a collapsing yen would force Japan to liquidate its massive holdings of U.S. Treasury securities to defend its currency.

That narrative falls apart once you understand who actually owns those Treasuries.

The majority of the US debt holdings are not owned by the Japanese government. They are held by Japanese corporations and private institutions that use U.S. Treasuries as a hedge against the fiscal recklessness of their own government.

Also, a sharply weaker yen gives Japan a significant competitive advantage by making its exports cheaper, widening the U.S. trade deficit, and allowing Japanese manufacturers to undercut American producers.
 


My wife left me today. She said it was because I “never stop talking.” I said the yen carry trade is a $20 trillion leveraged bet that the Bank of Japan will never normalize rates and she said “I’m taking the dog.”

Let me explain to you what I was trying to explain to her.

For thirty years Japan ran rates at zero. Zero. Free money. So the entire planet borrowed yen for nothing and bought literally anything with yield. Treasuries, Mexican peso bonds, Nasdaq, your uncle’s crypto. That’s the carry trade. It’s not a strategy. It’s a short volatility position wearing a business casual outfit.

Then in August 2024 the BOJ raised rates 15 basis points. FIFTEEN. And the yen ripped, the Nikkei fell 12% in a day, and the VIX printed 65. That was the tremor. That was the trailer.

She said “you said this last year.” I said YES AND I WAS RIGHT, THE MARKET JUST FORGOT, and she started packing.

Japan’s debt-to-GDP is roughly 250%. The BOJ owns over half the JGB market. They are the market. There’s no price discovery, there’s a guy in Tokyo with a printer and a dream. Every basis point higher on the long end costs them real money on debt they can never actually repay in real terms. So what do you do when you can’t default and you can’t pay? You inflate. You always inflate. It’s the only tool that doesn’t require anyone to vote.

She said “our marriage counselor thinks you have anxiety.” I said your marriage counselor doesn’t know what the 30-year JGB is doing and she said “NOBODY KNOWS WHAT THE 30-YEAR JGB IS DOING, THAT’S THE POINT, PAUL.”

My name isn’t Paul. That’s how far gone we are.

Anyway I’ve got canned goods, a Kagoshima yield curve chart laminated above the bed, and nobody left to explain it to. So it’s you now. Buckle up.
 
Looks like they are trying to trap PM shorts this week in a whipsaw.
 
Bill’s Commentary:
“The US Treasury intervenes for the first time in 28 years because…Japan, the largest holder of Treasuries would be forced into selling. How convenient!”

Why the U.S. stepped in after decades to prop up Japan’s yen — and what’s at stake​

Washington’s decision to join Japan in supporting the battered yen has prompted questions over what motivated the rare coordinated intervention, with analysts pointing to concerns over U.S. Treasury markets and Japan’s financial system.

Tokyo has grown increasingly wary of the yen’s decline, which recently dropped to its weakest level against the dollar in nearly four decades. The yen had been hovering at multi-decade lows, sliding to 163.73 per dollar last Thursday before rebounding to 157.57 on Friday.

The coordinated intervention was the first U.S.-Japan joint operation to buy yen since 1998, and the first coordinated intervention involving the two countries since the G7 acted to weaken the yen after the 2011 earthquake.

www.cnbc.com

Why the U.S. stepped in after decades to prop up Japan's yen — and what's at stake

Washington's decision to join Japan in supporting the battered yen has prompted questions over what motivated the rare coordinated intervention.
www.cnbc.com www.cnbc.com
 
This will be the harbinger of things to come... worth listening to at 1.25X

Trump Just Did This... And the Euro Crumbled​

00:00 The war on the globalists' money
01:33 Sovereigntists vs globalists: phase one was the cartels
03:16 The City of London's dirty secret: shadow banks
05:04 Japan: how the carry trade works
06:25 Reversing the trade: Bessent's $7bn yen buy
08:03 The squeeze, translated
10:01 Don't get caught in the crossfire
11:17 The bag holders: HSBC, Citi, Chase — and Blue Owl
12:34 One spark: crisis, emergency, new money
14:27 Bank runs and the rush to hard money
16:08 The next shoe: a new financial system
17:10 Derivatives, explained with a kilo of gold
18:20 CLOs: 2008 with the letters changed
20:25 Credit default swaps and the AI debt race
22:18 No bailout this time — and Europe breaks
23:16 Only probabilities, no certainties
 


The global landscape is entering what we have long identified as the “Panic Cycle” of 2026, a period where the structural weaknesses in the Western financial system converge with escalating multi-front geopolitical conflict with a significant global trend shift in 2027 taking the world into a significant economic low in 2028 infected by stagflation accelerated by rising conflicts that are unwinnable on many fronts.
 
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