CRASH WARNING: The Bond Market Just Turned Against Us — This Is Serious
In a Nutshell
Japan's 10-year bond yield hitting 3% may force the country to sell US Treasuries, which would spike US borrowing costs and trigger Fed rate hikes amid rising inflation from oil supply disruptions in the Strait of Hormuz. The Strategic Petroleum Reserve is at its lowest level since 1982, and oil prices are climbing as inflation pressures mount, contradicting Trump's calls for rate cuts. While AI stocks continue driving market highs, Walmart's weak guidance signals broader consumer weakness, and overleveraged positions at these levels carry significant risk if the Fed raises rates.
These notes were generated by AI and may contain inaccuracies.
Markets are looking pretty bad with NASDAQ's QQQ down 1%. The NASDAQ market on the larger time frame is trading still nearly at all-time highs, and SPY (S&P 500 ETF) is again trading nearly at all-time highs despite a bunch of concerns.
Japan's 10-year bond yield has hit 3% for the first time since 1996. The yield represents the interest rate that government pays on money that it borrows. Japan is at a critical point where they can either begin to sell US treasuries, which has been a very big concerning issue for the Treasury Department in the US because Japan is the largest foreign holder of US bonds.
If Japan needs to intervene with their own bond market and needs to offload US bonds by selling to bring down their yields, this means selling and dumping into the US bond market. If there's an oversupply, then yields are going to have to go higher to make it more attractive. This would mean that then that yield goes higher, and the interest that the US then pays on money that it borrows will go higher.
Two oil super tankers have been struck in the Strait of Hormuz. Oil prices are pushing higher during the pre-market session in the United States. UCO is currently up 2.94%, USO is currently up 2.31%, and WTI is up 1.83%. This follows a consecutive green day yesterday for oil.
The strategic petroleum reserve has fallen to the lowest level since 1982. The deal with Venezuela is supposed to top this off, but it is not happening. The country is getting dangerously low and seeing the implications of this at the pump, with oil prices going through the roof.
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