Japan’s Own Buyer of Last Resort… Sells

The story of the week last week was not Greenland or Davos drama, but Japan.

Japanese bonds fell to their lowest price in history. When prices fall, yields rise. Traders in New York and elsewhere globally are unwinding their “carry-trade” bets.

So, too, the Bank of Japan:

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Lower demand for Japanese bonds is pushing prices down and yields higher rapidly. (Source: Bloomberg)

The Bank of Japan’s holdings of its own government’s bonds are now near a 10-year low.

The yen carry trade has been a constant in global finance for 3 decades. Currently, the unwind is throwing the Japanese government into a crisis of historic proportions.

Americans take note. Not only are Japanese bonds undermining the AI rally on Wall Street. The crisis is a cautionary tale for the U.S. efforts to finance its own historic debt load.

~ Addison

P.S. Yesterday’s Grey Swan Live! with Joel Bowman — our “man on the scene” in Buenos Aires since before President Milei got elected – helped us rummage through collectivist politics… also a harbinger of things to come in the U.S. if New York’s Zohran Mamdani becomes the face of the Democratic Party in the midterms.

Joel also gave us a fresh primer on Investing At the End of the World as the Argentine market rapidly becomes deregulated and open for foreign investment in the country’s vast natural resources.

The replay will be up on the site for members soon.

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Later today — Friday, at 1 p.m. ET – Nick is back to help us cut your IRS tax bill in 2026.

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Our guest Nick Buhelos is going to walk us through simple steps on how you can:

Unlock 250+ deductions you currently can’t access.
Apply trading losses to other income (W2, 1099, even your spouse’s).
Shield your personal finances from trading risk.

Stay tuned for more details on how to join us on Friday at 1 p.m. ET.

If you have requests for new guests you’d like to see join us for Grey Swan Live!, or have any questions for our guests, send them here.

How did we get here? Find out in these riveting reads: Demise of the Dollar, Financial Reckoning Day, and Empire of Debt — all three books are now available in their third post-pandemic editions. You might enjoy one or all three.

The story of the week last week was not Greenland or Davos drama, but Japan.

Japanese bonds fell to their lowest price in history. When prices fall, yields rise. Traders in New York and elsewhere globally are unwinding their “carry-trade” bets.

So, too, the Bank of Japan:

Turn Your Images On

Lower demand for Japanese bonds is pushing prices down and yields higher rapidly. (Source: Bloomberg)

The Bank of Japan’s holdings of its own government’s bonds are now near a 10-year low.

The yen carry trade has been a constant in global finance for 3 decades. Currently, the unwind is throwing the Japanese government into a crisis of historic proportions.

Americans take note. Not only are Japanese bonds undermining the AI rally on Wall Street. The crisis is a cautionary tale for the U.S. efforts to finance its own historic debt load.

~ Addison

Joel also gave us a fresh primer on Investing At the End of the World as the Argentine market rapidly becomes deregulated and open for foreign investment in the country’s vast natural resources.

The replay will be up on the site for members soon.

Turn Your Images On

Later today — Friday, at 1 p.m. ET – Nick is back to help us cut your IRS tax bill in 2026.

Turn Your Images On

Our guest Nick Buhelos is going to walk us through simple steps on how you can:

Unlock 250+ deductions you currently can’t access.
Apply trading losses to other income (W2, 1099, even your spouse’s).
Shield your personal finances from trading risk.

Stay tuned for more details on how to join us on Friday at 1 p.m. ET.

If you have requests for new guests you’d like to see join us for Grey Swan Live!, or have any questions for our guests, send them here.

The dollar’s share of global reserves is now roughly 40%, down from 60% in 2016. No other fiat currency filled the gap. Gold did.

That is the only fact you need to understand the long-term arc.

After the West demonstrated it could seize reserves, “safe” became a new word. Gold has no counterparty. It cannot be frozen with an executive order. It does not require permission to settle.

The last time Uncle Sam had this much debt rolling over, interest rates were effectively zero percent. That allowed for a massive expansion of total debt, even as total interest payouts shrank.

Having said all that, why does President Trump want Greenland so badly (other than as retribution for not being awarded the Nobel Peace Prize)?

He insists it’s for national security, but, as I mentioned earlier, the U.S. military already has broad access to the island, as spelled out in the 1951 agreement signed by the U.S. and Denmark. Further, Greenland is under the protection of NATO, of which the U.S. is a member. If Russia or China tried to attack it, Article 5 of the treaty would be triggered, activating NATO forces.

Recent reporting suggests that some of Trump’s wealthiest backers see Greenland not as a military outpost or mining play, but as a blank slate. According to Reuters, influential tech investors—including Peter Thiel and Marc Andreessen—have pitched the idea of turning parts of Greenland into a so-called “freedom city,” offering a low-regulation, quasi-autonomous hub for next-gen technologies.

Japan’s 40-year yield climbed to a record 4.21%.

Japan holds $1.2 trillion in U.S. Treasurys.

When their domestic yields spike, Japanese capital returns home. That means selling U.S. assets: stocks, bonds, ETFs. That selling pressure cascaded through the global financial system.

This mechanism isn’t new.

The dollar’s share of global reserves is now roughly 40%, down from 60% in 2016. No other fiat currency filled the gap. Gold did.

That is the only fact you need to understand the long-term arc.

After the West demonstrated it could seize reserves, “safe” became a new word. Gold has no counterparty. It cannot be frozen with an executive order. It does not require permission to settle.

The last time Uncle Sam had this much debt rolling over, interest rates were effectively zero percent. That allowed for a massive expansion of total debt, even as total interest payouts shrank.

Having said all that, why does President Trump want Greenland so badly (other than as retribution for not being awarded the Nobel Peace Prize)?

Japan’s 40-year yield climbed to a record 4.21%.

Japan holds $1.2 trillion in U.S. Treasurys.

When their domestic yields spike, Japanese capital returns home. That means selling U.S. assets: stocks, bonds, ETFs. That selling pressure cascaded through the global financial system.

This mechanism isn’t new.