Behind the Balance Sheet #30 The Japanophile - Grant Williams on Japan’s Opportunity, Bond Market Risks & Gold Investing
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Jan 18, 2024 
Former hedge fund manager Grant Williams discusses his fascination with Japan and the potential investment opportunities in the country. He also talks about US Treasuries and the risk of a supply glut without enough buyers. Gold is another topic of discussion, as well as how Grant has built a financial media empire.
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Japanese Repatriation Could Strain US Treasury Demand
- Repatriation of decades of Japanese foreign investments would remove large pools of capital from US Treasuries and US equities, pressuring funding markets.
- Because Japanese institutional investors respond to government signals, coordinated domestic buying could absorb BOJ withdrawals and influence rates.
Treasury Market Faces A New Structural Risk
- The US faces a structural funding problem: record deficits meet a more competitive global capital market as central banks diverge and rates rise.
- The old reflex 'don't worry it will be fixed' no longer applies; auction coverage and demand must be watched closely.
Watch Treasury Auctions As Early Warning Signals
- Monitor US Treasury auctions and dealer demand closely because poor auctions can precede larger market stress and are no longer safely ignored.
- Watch auction coverage, bid-to-cover, and headlines about 'dreadful' auctions as early warning signals.