Japan is about to create a major disruption in the market this week!

Most people are unprepared for what is coming.

The Bank of Japan has just started, quietly, to intervene in the currency.

The exchange rate of the US dollar against the Japanese yen has reached its highest level in 40 years.

The yen has officially entered the danger zone.

Here’s what no one tells you:

The exchange rate of the US dollar against the Japanese yen is approaching 160, and this is the breaking point.

At this level, Tokyo stops talking and actually starts taking action.

This is also the level at which Japan previously intervened - every market participant circles this level.

And now, connect the dots.

Japan is the largest foreign holder of US Treasury bonds - over 1.2 trillion dollars.

This fact alone explains a lot.

The intervention is simple.

If Japan wants a stronger yen, it has to sell dollars and buy yen.

These dollars are deposited in reserves.

A large part of these reserves consists of US Treasury bonds.

So, it is no longer just a foreign currency issue.

It has become a US Treasury bond issue.

And this is extremely serious.

When Japan sells dollars, liquidity is drained.

And if it also has to sell Treasury bonds to do this, the pressure falls on the weakest part of the system.

← US Treasury bonds are negatively affected

← Yields rise