Financial Times/Eric Platt and Joe Rennison/4-11-2022
“The Japanese yen’s rapid slide is threatening foreign demand for US bonds, just as the Federal Reserve plans to start shrinking its $9tn balance sheet.”
USAGOLD note: China and Japan, as a memory refresher, are the two largest holders of U.S debt and for many years constituted the bulk of external demand for U.S. Treasuries. China has already pretty much vacated the market and now Japanese interest is threatened by the high cost of hedging currency volatility. A strategist at Deutsche Bank goes to the heart of the matter asking “Who is the marginal buyer of Treasury issuance going to be after the Fed?”
