00:00There was a massive meltdown in Japan's government bond markets last Tuesday.
00:05Investors are bracing for more volatility and stress in Tokyo could turn.
00:10into stress for Wall Street and beyond yields on 30 year 40 year Japanese.
00:15That spiked on Tuesday.
00:16Higher bond yields mean higher borrowing costs.
00:20Remember, Japan was home to ultra low interest rates for decades, providing.
00:25An anchor to borrowing costs around the world.
00:27The nation has some of the biggest piles of debt and.
00:30Developed markets after years of large stimulus spending.
00:33Low interest rates meant Japanese.
00:35Investors bought trillions of dollars of overseas assets to get better returns.
00:40But when bond yields jump, some of these bets may be forced to unwind.
00:43Take last week, for example.
00:45As bond yields spiked, treasuries fell and the euro to the dollar jumped against.
00:50The move was so seismic that by the end of the day, U.S. Treasury Secretary.
00:55Scott Bessent had called his Japanese counterpart, Finance Minister Satsuki.
01:00Katayama to tell her that the sell off had been felt in the American market.
01:05So what's happening domestically in Japan to move markets so drastically?
01:10One of the big factors is a snap election on February 8th.
01:13Prime Minister Sanae Takei...
01:15has pledged to cut some taxes without saying how she'll pay for it.
01:19Bond investors...
01:20don't like that.
01:21Even with so much uncertainty ahead, some are optimistic.
01:25There's no question that, you know, given the setup over the last 30 years, there's bond market volatility.
01:30Japan needs, you know, a more outward-looking economy.
01:35more growth, you know, to really get to a different place than where it's been over the course of the last three decades.
01:39But we're actually...
01:40We're quite excited because we see pensions and corporates in Japan, you know...
01:45looking more outward, we see a culture of risk-taking developing in Japan that really hasn't existed.
01:50for the last three decades.
01:51But if there's one takeaway for all the global traders out there this year, it's...
01:55watch Japan markets.
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