Sanae Takaichi steps into the debt market 'minefield', and the Bank of Japan seems to look the other way?
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Japanese government bonds have recently collapsed significantly, all because Prime Minister Sanae Takaichi boldly announced a pause on food taxes, which has frightened the market, worried that Japan's fiscal deficit will spiral out of control. With ultra-long-term bond yields soaring to historic highs, one can't help but recall the 'Truss disaster' in the UK.
But at this critical moment, the Bank of Japan might choose to 'sit on the sidelines'. Internal sources reveal that the central bank is quite conflicted: if it steps in to buy bonds to suppress yields, it would not only contradict its own ongoing interest rate hike and balance sheet reduction plans but could also push the already weak yen into a deeper abyss. Governor Kazuo Ueda has stated that they are 'prepared to act', but the actual thought of the central bank is: this mess was created by the government, and they should clean it up themselves.
The market appears calm on the surface, but underneath, there are turbulent undercurrents. Major domestic buyers, such as insurance companies, are on the sidelines, and may even sell off. If the bond market truly collapses, the Bank of Japan will face a nightmarish choice: to rescue it could trigger even fiercer sell-offs and yen depreciation; to not rescue it would mean watching the market paralyze helplessly.
Do you think the Bank of Japan should intervene this time? Share your thoughts in the comments section. #BTC走势分析 #Strategy增持比特币