The Market Is Sending a Warning Signal

Look at the current Japanese government bonds. 10 YEARS: 2.24% 20 YEARS: 3.10% 30 YEARS: 3.51% 40 YEARS: 3.73% These numbers are completely UNusual. Japan is the world’s largest lender, with foreign assets around 3.7 trillion dollars. Now, add the next part. The swap market is pricing in about an 80% chance that Japan will raise interest rates to 1.00% in April. RE-READ THAT. An interest rate of 1.00% in Japan is the end of the era of cheap money. Such a fact explains a lot. Because for decades, Japan has been a financing driver. People borrow yen cheaply and pump that money into US stocks, US credit, US technology, and cryptocurrencies. When Japan’s interest rates are adjusted higher, that momentum begins to collapse. And Japan is not small. So, if Japan shifts even a small portion of its 3.7 trillion dollars back home, it will force sales elsewhere. Now, connect the dots. China has been withdrawing from US Treasury bonds. If Japan starts doing the same, even slowly, it will become a real flow of de-dollarization, not just a headline. And when the biggest sources of capital stop funding the dollar system in the same way, the entire market must reprice. This is why bonds are important first and foremost—not because of “interest rate discussions.” Because it changes where thousands of billions of dollars are sent. And when that shift begins, liquidity will decrease, and risky assets will stop operating “normally.” THIS IS NOT GOOD AT ALL. I am watching this into April because this is exactly how a real regime change begins, with bonds quietly shifting before anyone lifts their head from the crypto chart.