Reaction to US tariff-tax mess weighs on markets and trade; US data underwhelming; Fed says US 2025 job gains were an illusion; iron ore price falls; UST 10yr at 4.03%; gold rises again, oil on hold; NZ$1 = 59.7 USc; TWI-5 = 63.1

This looks very pre 2008 setup

The NZ Mortgage market is essentially what the US had just before the GFC, a giant ARM  (Adjustable rate mortgage)  the first year low but then rising up and up....

Buyers beware, your rates are predicted to rise in 10-12 months time, and on a 30 year mortgage your will have paid bugger all off, the current mortgage rates are the bait before the switch, assume you are paying 1.25% more because you will be very soon, unless disater strikes NZ.

Then worry for your job! And the next big leg down in wealth, which may well be your kiwi saver.  Ans speaking of US Markets, the S&P has ben on a real tear for over a year but is now struggling to find new higher highs, tech will not ride to the rescue this time.

There is not a lot of good news that I can see, and the implications of Japan's debt and the massive carry trade haven't even fully kicked in...  yet.

And what are they doing about this - well, of course, they are trying to hide it - it's what the West does as they desperately try to keep their fiat-Ponzi scheme on life support.

And Japan's latest trick... well, Policy Reserve-Matching Bonds (PRMBs) - this will have significant ramifications for both domestic and global financial markets.

This policy allows banks and insurance companies to hold government bonds on their balance sheets (BSs lol) at maturity values, effectively enabling them to mask potentially massive unrealised losses as yields spike and bond prices tank. Such a mechanism has to have broad implications for capital flows, risk perceptions, and market dynamics internationally.

Japan's banks and insurers are sitting on ~$1 trillion losses, and the Japan Institute of Public Accountants has just announced that they are changing the rules using these PRMBs, so that losses can be hidden using blatant accounting and balance sheet chicanery, in order to disguise their true equity positions.

Government bond assets held on their balance sheets will be valued at held-to-maturity values, essentially meaning that a bond that might only have a market value of say 30 cents could be shown in their balance sheets at 100 cents in the dollar. 

By treating certain bonds as held-to-maturity value, institutions can avoid recognising marked-to-market losses. This enhances the apparent health of their balance sheets and could well amplify long-term solvency challenges. When institutions perceive less immediate pressure from losses, they tend to engage in riskier investment strategies, potentially amplifying systemic risks.

As Japanese institutions hold a monumental amount of government debt, their actions, influenced by these bonds, could lead to global volatility in bond markets. Investors may become more cautious about other high-debt nations, due to perceived risks affecting demand for their bonds.

As Japanese institutions start to withdraw from international bond markets, yields on U.S. Treasuries and other "safe" assets could rise due to decreased demand. This might lead to higher borrowing costs globally.

Other countries with high debt burdens might see increased scrutiny from investors. Countries like the United States  (with a total debt-to-GDP ratio north of 600%) may face similar risk evaluations, leading to a potential repricing of their bonds. This, to me, is inevitable because the true inflation rate is so blatantly manipulated, and at 4%, bondholders already endure substantial negative yields. 

Japan's Policy Reserve-Matching bonds represent a significant shift in managing bond assets, with potential global implications that include market volatility, changes in capital flows, and altered risk perceptions.

This directly links to the global (~$20 trillion) Japanese carry trade, which props up the US financial markets. IOWs, Japan's massive debt problem and decades of ZIRP/NIRP, along with monumental money-printing/QE, don't just reside in Japan. As a major liquidity provider for global markets, this will have a profound effect on the entire global financial landscape.

With the recent rise in Japanese interest rates, compounded by the risk of significant currency shifts, this massive trade no longer makes any sense to me.

SUMMARY - Japan's Policy Reserve-Matching bonds represent a significant shift in managing bond assets, with potential global implications that include market volatility, massive changes in capital flows, and drastically altered risk perceptions.

STILL TO COME THIS WEEK

From this Thursday, through next week, as the CME long and short futures contracts are exposed for the March contracts, plus a significant shortage of physical silver becomes obvious, along with a short squeeze, the fiat Ponzi and the plummeting purchasing power of their currency tokens becomes even more stark - kind of like the silver shorters swimming naked as the tide recedes 

As silver increases its role as a significant monetary asset globally, and China increasingly backs their domestic currency with it too, all of this becomes an unmistakable precursor to a rapidly looming international financial reset, where fiat becomes increasingly disenfranchised and hard-backed currencies become the order of the day.

Just imagine a system where private bankers working in concert with governments can no longer thieve from the productive economy and the working classes by continually diluting the purchasing power of our currencies.

It seems that the entire Ponzi needs to crash before anything like this can be politically brokered.

Regards
Col