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'Never Bet Against The Bank Of Japan'
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ticker lesson
Breakdown
0:00lesson
Japan's monetary policy and carry trade pressure
- F% wants higher Japanese rates and stronger yen
- Carry trade under pressure
- Triffin's dilemma in US dollar
- Yen overly weak
- Yen short trade ongoing
1:35lesson
Bank of Japan's operational approach
- Never bet against Bank of Japan
- Historical bets against BOJ failed
- BOJ bought JGBs and Nikkei
- Fed bought US 10-year bonds
- BOJ hedged against yield rise
1:36JGB· ticker
Japan's debt to GDP ratio and BOJ holdings
- Japan's debt to GDP peaked at 233%
- Current ratio at 204%
- BOJ owns significant JGBs
- 24% of JGBs to roll off next few years
- 33-35% by 2030
1:37Nikkei· ticker
Nikkei and BOJ's balance sheet impact
- Nikkei rising due to risk-on trade
- BOJ's balance sheet shrinking
- Debt to GDP ratio falling from QT
- No need for intervention
- Leveraged carry trade in crisis
1:38US 10-year· ticker
Fed's bond buying and yield implications
- Fed bought 70% of US 10-year issuance
- Yields rising as value of debt portfolio falls
- BOJ's hedging strategy
- Fed's QT parallels BOJ's actions
- Debt to GDP ratio falling from QT
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