Macro Acumen @macroacumen

@RayDalio My question is, will the US Government be willing to implement the solutions you outlined? It is clear that they can do it. But, will they?

@ekwufinance Perhaps, they're selling the rumour to buy the news.

@jsblokland It's just a new era where capital gets more and more expensive. This requires a shift in mindset and expectations across the globe when it comes to access to capital and the cost to run our lives.

@Hedgeye Cheap capital is a bye-bye. I'm waiting to see what could be the real catalyst that turns the rising yields into a major uptrend in bonds.

@zerohedge Will the AI debt bubble burst? How elastic is it considering that cheap capital is history. We're now in the era of expensive capital so the question is, how much risk and for how long can the financiers endure? That ultimately determines if and when the bubble could go boom!

@elerianm I expect higher interest rate expectations to remain elevated. Bond Yields aren't coming down anytime soon.

Here is what this actually means for the average household in Japan: ​"Highest in history"? It’s a record for the 30-year bond specifically (introduced in 1999), but the underlying signal is what matters: the era of free money in Japan is over. ​Mortgages are getting pricier: Long-term fixed mortgage rates (like Flat 35) move with bond yields. Expect home loans and borrowing costs to keep creeping up. ​Inflation isn't temporary: High yields mean markets expect higher prices to stay. Leaving emergency cash sitting in a 0.01% mega-bank savings account means losing buying power every month. ​Budget squeeze: Japan has a massive national debt (>260% GDP). Higher interest rates mean the government spends more paying interest on old debt and less on social safety nets. ​Bottom line: Shift out of a "deflation mindset." Time to review home loan rates, trim unnecessary fixed expenses, and put excess cash into inflation-resilient assets (like NISA tax-free accounts) instead of hoarding pure cash.

@Barchart And if raising rates does more harm than good, will the US Treasury come to Japan's aid? Maybe Bessent knows that a Fed rate hike is inevitable so he is calling for Japan to hike theirs as well to keep Yen carry trades manageable.

The era of free money is officially over, and most people are still sleeping on what that actually means. ​When global bond yields break 15 year highs, it acts as a massive vacuum on global liquidity. Here is why this matters to everyone, not just traders on Wall Street: ​First, bonds set the floor price for every asset on earth. If investors can sit back and collect 5% or more risk free from government debt, they demand way higher returns to hold risky assets like stocks, real estate, or venture-backed tech. That means valuations get squeezed across the board. ​Second, borrowing costs for real people stay painfully high. Mortgages, credit card rates, and small business loans directly track these benchmark yields. As long as yields stay elevated, cheap debt isn't coming back to rescue consumers or pump property markets. ​Third, governments are walking straight into a debt trap. Countries are floating record amounts of debt to cover deficits right when interest rates are peaked out. A massive chunk of future tax revenues will now go toward just servicing interest instead of driving real economic growth or infrastructure. ​In 2008, central banks slathered the system with zero percent rates and money printing. Today, they are stuck holding rates high to fight inflation, meaning high borrowing costs are here to stay. Capital finally has a price again, and the global economy is going to have to learn how to live with it.

The era of free money is officially over, and most people are still sleeping on what that actually means. ​When global bond yields break 15 year highs, it acts as a massive vacuum on global liquidity. Here is why this matters to everyone, not just traders on Wall Street: ​First, bonds set the floor price for every asset on earth. If investors can sit back and collect 5% or more risk free from government debt, they demand way higher returns to hold risky assets like stocks, real estate, or venture-backed tech. That means valuations get squeezed across the board. ​Second, borrowing costs for real people stay painfully high. Mortgages, credit card rates, and small business loans directly track these benchmark yields. As long as yields stay elevated, cheap debt isn't coming back to rescue consumers or pump property markets. ​Third, governments are walking straight into a debt trap. Countries are floating record amounts of debt to cover deficits right when interest rates are peaked out. A massive chunk of future tax revenues will now go toward just servicing interest instead of driving real economic growth or infrastructure. ​In 2008, central banks slathered the system with zero percent rates and money printing. Today, they are stuck holding rates high to fight inflation, meaning high borrowing costs are here to stay. Capital finally has a price again, and the global economy is going to have to learn how to live with it.

A new structural buyer has emerged in the gold market. Since 2024: - Tether: 73.6t - China: 49t Tether has purchased more gold than China officially and now holds more gold than Australia, the world's third-largest gold producer. We've never had a gold bull market with a structural bid like this.

@HenrikZeberg Could we say the inflation target itself is overdue a review? Is the 2% target still achievable in the current global economic landscape?

It's a very bad place to be for any Central Bank. If BOJ cuts rates, they worsen the rate differential of Japan and American interest rates, especially considering the recent increase in hike expectations from the Fed. This would mean a higher incentive for Yen carry trades. Since the Yen carry trade is one of the major factors weighing on the Yen, the BOJ may have to intervene again and this time, they might actually sell US Treasuries for real if the Fed does not join forces to find other ways. On the other hand, if BOJ decides to hike interest rates, it's still bad for the economy.

I see that from now, it will be difficult for BOJ to hike interest rates. The issue though is, if American Fed hikes rate, the carry trade incentive will increase which will put more pressure on Yen. Then another balancing rodeo will erupt where BOJ and MOF will be looking for intervention ideas. This seems unrelated and I think America should not decide its monetary policy with bias but it's one of those Systemic problems that could cause a meltdown.

...in other words, Japan is reaching the point where higher interest rates start competing directly with government spending. The ¥36.6T is not just interest. It includes debt redemptions. But the message is clear: Japan's cost of carrying its debt is accelerating as yields rise. That creates a dangerous feedback loop: Higher yields → higher refinancing costs → larger debt-service burden → less fiscal room → greater concern about Japan's finances → more pressure on JGB yields. If the BOJ has to raise rates to defend the yen, it risks making an already expensive debt problem even more expensive. Japan's rate problem is becoming a fiscal problem, and its fiscal problem can become a global liquidity problem.

@TaviCosta When it comes to the market where money runs every move, what people believe is the last resort. At the end of the day, the market will react to what the government reports (mostly). With that said, I do agree that sometimes the market can ignore what the government reports.

Why a U.S. rate hike could create a problem far beyond America A Fed hike would widen the U.S.–Japan rate differential. That makes the yen more attractive as a funding currency and strengthens the incentive for investors to borrow yen and buy higher-yielding dollar assets. The yen carry trade expands. A weaker yen then puts pressure on the BOJ to raise rates. But higher Japanese rates can trigger the opposite problem: tighter financial conditions, higher JGB yields, weaker domestic demand and potentially the unwinding of yen-funded positions across global markets. Japan also holds roughly $1.12 trillion of U.S. Treasuries, making Japanese capital flows important to the Treasury market. Now add the U.S. debt problem. Treasury Secretary Scott Bessent is expanding Treasury buybacks to improve liquidity and manage the long end of the Treasury market while the government continues refinancing a large stock of outstanding debt. The objective is simple: Keep U.S. borrowing costs from rising unnecessarily. That creates a difficult policy interaction: Fed hikes → wider U.S.–Japan spread → stronger carry trade → weaker yen → BOJ tightening pressure → tighter Japanese financial conditions → potential capital repatriation → global bond-market volatility. The Fed is therefore not looking at U.S. inflation and employment in isolation. The U.S. rate, Japanese rate, yen, carry trade and Treasury market are interconnected through global capital flows.

I wouldn't necessarily call the buyback a mistake. Treasury is largely using it for its stated purpose: managing liquidity and improving functioning at the long end of the Treasury market. That's a tactical response to a market-functioning problem, not a solution to the structural fiscal problem. The buyback can help with the former without solving the latter.

@ekwufinance Great perspective. I agree.

@KHerriage Would love to see it. I am more interested in how the market will react. If inflation worries grow, will the market still find bonds appealing? How far can the Treasuries effort push bond prices?