Want to Know Where Markets Go Next? Watch Japan’s Long Bond

Number 1 thing to watch

Both the US treasury and equity markets are vulnerable, having been inflated by Japanese flows of funds (as has the dollar). And, if sharply higher JGB yields entice Japanese investors to return home, the unwinding of the carry trade could cause a loud sucking sound in US financial assets. Hence, I would rank trying to understand and follow the surging long end of the JGB market as the number 1 most important thing for investors at the moment. (Albert Edwards)