Looks like I accidentally made it in the back door of being published in Nikkei Not that that’s by any means a goal, let alone an interest of mine “What to do about Trump’s $9tn debt dilemma” by @IChronicle ←owned by @FT← owned by @nikkei “Another important and perhaps overlooked risk for US Treasuries is the fallout from the Japanese Government Bond (JGB) market. When the Bank of Japan (BoJ) tapers its rollover of long-dated JGB holdings, retrenchment of a guaranteed buyer of last resort reveals weaker demand and forces up rates. This has two important knock-on effects, argued Weston Nakamura, an expert on Japanese markets. The first is upward pressure on other developed market yields, something that is more consequential in the US (which due to US yields being the global risk-free rate affects other asset class valuations) than in Japan itself. The second is market functioning and liquidity: the combination of Japan’s government adjusting the maturity profile of its own debt and the BoJ trimming its balance sheet has the potential to create volatility episodes that get exported. Japan issues bonds in its own currency, so can’t default, and rampant inflation isn’t an issue (albeit cost of living still played a part in the government losing its upper house majority), so why does Japan need to change its policy course so dramatically? The answer, suggests Nakamura, is the need to improve the functioning of capital markets. Past radical actions such as yield curve control flushed out key participants like market makers and arbitrage traders. In order to reboot these essential workings of the financial system, and therefore the liquid capital flows Japan’s economy needs, the BoJ must lessen intervention and allow the free market to breathe.”

I’m still going to continue calling out “Nikkei exclusive”policy leaks from BOJ, MOF & other blatantly dead-on “accurate” state-media behavior. Obviously.