BlackRock strategists say intensified capital competition means Japan’s rate
reset is spilling across borders. They outline a bond-market feedback loop:
rising U.S. rates could weaken the yen and pressure the Bank of Japan to act
sooner; higher Japanese yields could pull capital home, reducing demand for U.S.
Treasureries and raising U.S. borrowing costs. Decades of ultra-low domestic
yields made Japan a major capital exporter; Japanese holders now own about
$1.1trn of U.S. Treasures. A 5% repatriation would be roughly $55bn — about
one-quarter of last year’s foreign net purchases of U.S. Treasures.
