Global Macro Update: Is Japan Breaking the Bond Market?

In this Global Macro Update, Nik argues a global bond crisis is brewing and it starts outside the United States. Japanese yields are driving the worldwide sell-off, with German and UK bonds close behind, while inflation expectations roar back on the oil shock from the war in Iran. Nik walks through every major asset class, the bear flattener in US Treasuries, why credit spreads show no fear at home, and why the SOFR market signals a flight to safety rather than US bond stress. On the economy, he makes the case that the US labor market is strong, housing inflation is bottoming, and the AI capex boom is creating demand-driven inflation now showing up in ISM prices paid. The could-be crisis is most dangerous abroad, where dollar strength and dollar-denominated oil costs are choking the ability to service debt. The Bitcoin Layer and its guests do not provide investment advice.