May. 2 at 8:50 PM
Bond market still jittery
Japan finance minister saying selling US Treasuries (
$1.13T) is a "card on the table"
Noteworthy shift in govt's messaging, given historical reticence by Japan leaders to even mention that such a threat could exist
Also, Morgan Stanley came out w/ its FY25 Fixed Income Outlook: "Uncertainty about US fiscal policy & the economy are key factors driving markets & are likely to continue causing heightened volatility thru the year"
"Yield curve is expected to steepen during the year"
Also, JP Morgan note: China PBOC is unlikely selling US Treasury holdings but Japan private & institutional investors
"In our view, a lot of the recent sell-off can be explained by foreign investors requiring a higher risk premium for US debt given persistent long-term fiscal concerns"
Prospect of a more de-synchronized monetary policy cycle (Fed cuts & BoJ hikes) could result in narrower interest rate differentials, causing Japan investors to repatriate more capital back home
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