- Arthur Hayes said that this is an embarrassment and will make others think twice about loading up on treasuries
- The Norinchukin Bank had previously held a big portion of its ¥45 trillion ($315.5 billion) portfolio in foreign government bonds
- The 30-year US Treasury yield climbed to 5.089%, which is the highest since October 2023, following a weak 20-year bond auction
Norinchukin Bank announced a loss of approximately $12.6 billion (¥1.8 trillion) for the fiscal year ending March 2025, primarily due to big losses on its holdings of foreign government bonds, especially US Treasuries and European sovereign debt.
This didn’t come out of nowhere, since the bank was forecasting a loss of ¥1.9 trillion back in February, with the CEO announcing his resignation. Today, the loss became official.
Arthur Hayes, co-founder of BitMEX, commented on the situation, saying that this is an embarrassment and will make others think twice about loading up on treasuries. He also stated: “There goes another price incentive buyer of the doo doo that The BBC needs to sell. All eyes are on the Brrrr button.”
His comments are likely referencing the notion that the Federal Reserve might engage in further money-printing to handle fiscal problems, as there are general concerns regarding the global bond market and the looming challenges for the US debt.
As for the Norinchukin Bank, its loss is attributed to the devaluation of its foreign bond holdings, particularly US and European government bonds, considering that the global interest rates remained higher than anticipated. The bank had previously held a big portion of its ¥45 trillion ($315.5 billion) portfolio in foreign government bonds as it sought higher yields during Japan’s prolonged period of low interest rates.
In response to these losses, apart from the leadership changes, the bank is now focusing more on Japanese government bonds (JGBs), which have become more attractive due to rising domestic interest rates and inflation.
Arthur Hayes Slams Situation, Warns of Fed Money-Printing Risks for US Debt
Hayes’ statement points to a growing concern about the sustainability of US debt. Recently, it was reported that the 30-year US Treasury yield climbed to 5.089%, which is the highest since October 2023, following a weak 20-year bond auction.
Japan didn’t fare better either, if not worse. The country’s 30- and 40-year bond yields reached record intraday (a single trading day) highs due to the Bank of Japan reducing bond purchases, leading to a dramatic sell-off in Japanese bonds.
This could mean bad news for the government bonds in the near future, since they were always seen as a traditional safe-haven asset. Still, the stabilization of the financial markets remains a topic of discussion among financial experts, and we’ll see how it all turns out very soon.
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