Why Japanese Banks Care About U.S. Bond Prices—And Vice Versa

Japanese life insurers and banks hold big chunks of U.S. Treasuries. When Treasury prices fall, their hedging costs—the price of protecting themselves against yen strength—jump. That pushes them to sell unhedged bonds, amplifying the selloff. The result: yield swings in Japan and America feed each other, moving more than raw market correlation suggests they should.