The "Electronic Box" of the World Closed – Interests in Japan Explode and Threaten Global Liquidity

[Igor Pereira]

Traders, stop everything. While retail looks at Bitcoin's 5-minute chart, the real danger He's graduating from the Japanese debt market.

By Igor Pereira Financial Market Analyst

Nobody's talking about it, but the Yields of the Japanese Government (JGBs) Titles are rising vertically. If you have money invested in any risk asset, you need to pay attention to it now.

Below are alarming data and why this can trigger the next liquidity crash.

The image I bring today is terrifying for those who understand global macroeconomics. Japan's entire interest curve is rising aggressively:

• JGB 10 Years: Crossed the critical barrier, reaching 2.128 % (high +2.70%)

• JGB 20 Years: It broke the 3%, reaching the 3.031%.

• JGB 30 and 40 Years: They're offering. 3.440% and 3.625 % respectively.

For more than 20 years, Japan has been the world's "Electronic Box".

• How It Worked: Investors took Yen borrowed at 0% (or negative) interest and used this "free" money to buy US, Crypt, and Real Estate shares. That's the famous Carry Trade.

• What Changed: When the ten-year income exceeds 2.1%, the money that used to be free ceases to be. The cost of the loan went up.

The increase in interest in Japan acts as a giant vacuum cleaner, sucking global liquidity back to Tokyo.

1. Repatriation: Japanese institutions are the largest foreign debt holders in the US. If they can finally win 3.6% risk-free at home (JGB 40Y), they stop buying American Treasures and bring the money back.

2. The Unwind: We saw a preview of this in August 2024. When the yen strengthens and yields rise, leveraged traders suffer Calls of Margin.

3. Forced Sale: To pay off the loans in Yen that have become expensive, they are forced to sell their "winning assets" (USA shares, Gold, BTC).

The increase in the income of the JGBs effectively functions as a global interest increase, even if the Fed does nothing. Risk assets feel that way first.

What to Do:

1. Monitor USD/JPY: If the pair falls violently (Yen value), it is the sign that the liquidation has begun.

2. Care for Risk Assets: Technology and Crypto actions are the most exposed to Carry Trade.

3. Gold: Although it may suffer in the initial liquidation (to cover margin), it remains the final refuge when the fiduciary debt system cracks.

I've seen enough cycles to know how this ends. If ten-year income moves too fast, things break.

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Game Turned: Protect yourself from Japanese Shock

We anticipate the banking liquidity crisis in the US, and now we're monitoring the Japanese trigger. Public analysis alerts the problem, but only members Premium know how to operate Short in Yen pairs (XXX/JPY) to profit from capital repatriation.

Don't get caught in the way of the world's largest capital flow.

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