Japanese banks are buying us treasuries to reduce exposure to the euro and prevent rates to increase in the real estate market. When rates increase real estate valuations decrease. A decrease in valuations decrease asset values in Japanese bank portfolios in their shadow accounts. The no reported valuations represent loses to the bank. The stock market anticipates these losses and lowers price expectation based on demand. The bank stock will begin to decrease. The large Japanese banks represent a quarter of the Japanese stock market. A sudden drop in the bank stock price would trigger a sell off. Therefore, Japanese banks are forced to buy us treasuries to keep rates low. Karate verse kungfu currency wars[Learn More ...]

&Links