What Triggered Fitch's Downgrade Of U.S Debt?

With still no further clarity on Bank of Japan’s new policy framework of Yield Curve Control, and currency and cash bond markets out of sync, Weston Nakamura examines market price action and activity on US and Japan rates through the lens of futures markets, in order to determine if cross asset market behavior is normalizing.

Weston also notes the schedule for this week, in which there will be 30-year auctions held in both the Japanese Government Bond market, as well as the US Treasury market, within 2 days of one another. Given the respective policy setups for US debt issuance and Bank of Japan YCC, there may be competition for investors’ capital playing out at these long-dated bond auctions.

Finally, Weston offers a potential theory as to why Fitch Ratings had suddenly downgraded their credit rating of US debt, while subsequently publishing positive commentary on Japan’s credit risk in light of the Bank of Japan’s surprise jump in interest rates - which largely went unnoticed. In doing so, Weston dives into the very active world of of yen-denominated foreign bond issuance, in which global corporates and sovereigns have been rushing in to Japan in order to tap the last bastion of cheap money left.
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Disclaimer: Nothing discussed on Market Depth should be considered as investment advice. Please always do your own research & speak to a financial advisor before thinking about, thinking about putting your money into these crazy markets.

[edreeves]

Really appreciate your time and effort and extended commentary.

[bob]

Thanx for the info. This was the first time I was able to watch your video, I’m a trucker so you’re normally just in my ear. You face expressions are classic!! Thanx again

[champstar]

This needs to become a regular segment/feature -- "the conspiracy of the week."

[triviumtyler]

Thank you for you perspective in markets I know nothing about

[MakuLabs]

You, my man, have to be protected at all costs. Great investigative journalism! 🎉

[Patriciacraig]

The news media is currently flooded with economic statistics. It takes a lot to see beyond the sea of headlines and focus on what matters, which is that no matter how low equities fall, they always rise again. I completely disregard all news and continue to invest. I recently set aside $45k to invest in the market as we anticipate a meltdown. Do you have any suggestions?

[peternmesoma]

Thanks Weston you've been of great help

[RobertoSchneider-bi]

We will soon find out when Fitch releases their earnings for this quarter and the next.

[nissanp]

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[rohitkothari]

2 Quadrillion yen!!😂 Had me burst out laughing 🤣🤣

[mattanderson]

Very very interesting!!
This kinda' makes
Let's watch, wait and see....

[jamesheadings]

My thought was that they wanted to slap the Fed in the face over hurting Europe with interest rates. Your conclusion is better fleshed out though.

[andrewshantz]

Thanks Weston. Great “nonsense” as usual 👍🏼

[fredhancock]

Jeeeezus - BOJ put the hammer down on JGB yields, and it reverberated across the globe this morning.

[nobodysfool]

Cynical. I like it.
These ratings agencies should be unbiased on credit ratings.. but this isn’t the first time they’ve engaged in this kind of behavior: just last year, a proposed update to S&P’s rating methodology was blocked by the DoJ for antitrust reasons.

[gossumx]

So what happens to Berkshire when the rate changes?

[morganshook]

Astar will be a major blockchain in Japan as they move to their cbdc. Partned with Sony Toyota etc

[Cleyhill]

Japans public finances are fine. Potential the safest in the world. That figure you quoted includes renewal of expired bonds. Also the BOJ makes an income on its operations (due to interest rates) which almost completely balances the actual interest costs of the government (not the deliberately inflated 22% you quoted) of roughly 3 trillion yen. You can research both those figures.

Bonds can always an easily be purchased by the central bank however this creates inflation, this is fine as it increases nominal GDP however its not fine if yields rise too.

In other-words the risk of default is always proportional to inflation expectations as reflected in the long-term yield. Japan has the lowest long-term yields in the world, therefore one might say it is the safest and most financially stable government. To reiterate outstanding debt is irrelevant, only bond yields matter.

[recca]

Hi, had the same hunch and was waiting 4 it

[peternmesoma]

Which website can I find that competitive boj ops