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🦧 japan money may not be as easy anymore

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🦧 japan money may not be as easy anymore

Ape of Omaha
Mar 30, 2023
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🦧 japan money may not be as easy anymore

www.wiseape.fyi

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🏦 mr. kuroda -> mr. ueda

  • haruhiko kuroda's been the governor of the bank of japan since 2013, and his time is coming to an end

    • as director of the world's 3rd largest monetary policy ($5tr economy), he was famous for unleashing $3.4tr worth of japanese cash on the investment world

    • this meant a decade of ultra-low interest rates in japan, sending a flood of japanese money overseas

  • soon, in april, kazuo ueda will be inaugurated as the new governor of the bank of japan, and he will likely reverse the flow of yen across the world

 
 

🚫 no longer easy

  • "easy money" or easy monetary policy means lots of cash in the economy and therefore low interest rates (which was how the yen looked like under kuroda’s watch)

  • interest rates have been rising everywhere else in the world, and ueda (the new governor) will probably have to raise rates for japan as well

    • the spread (or difference) between us 10-year treasury yield and japan 10-year treasury yield has widened from ~.50% to ~3.24% in the past 2.5 years

      • making it one of the reasons why the us dollar appreciated (or strengthened) 20%+ relatively to the japanese yen

 
 

🤔 just how important is jpy (yen)?

  • money’s already starting to “repatriate back to japan”

  • as japan's international investment holdings (~$3.9tr) are one of the largest (i.e. bigger than the uk economy), imo: rates movements in japan will be strong enough enough to bring about swings in global bond (and perhaps equity) markets

    • as of november 2022, japan held 14.87% of foreign-owned us debt, beating china as the largest foregn holder of us debt

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🦧 japan money may not be as easy anymore

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