Negative Carry Trade Losses in Japan

On today’s show we are going to look at something that has been making financial headlines all over the world over the past two days. The purpose of discussing it on this show is that even the major financial media like the Wall Street Journal and Bloomberg have been misreporting the story.  The headline is that another Bank, this time a Japanese bank is running into trouble. The assumption is that the problem has to do with the inversion of the yield curve and investment in long term treasuries is the reason for the bank’s problems. Some of the problems which cause the failure of Silicon Valley Bank, First Republic Bank and Signature Bank last year stemmed from the need to raise additional cash, and in so doing, those banks were forced to sell US Treasuries at a loss. If those banks had the luxury of holding those bonds to maturity, then there would have been no losses.  What we will discuss today is that the symptoms look similar, but that the root cause of the actual problem is quite different.  ------------ **Real Estate Espresso Podcast:** Spotify: [The Real Estate Espresso Podcast](https://open.spotify.com/show/3GvtwRmTq4r3es8cbw8jW0?si=c75ea506a6694ef1)   iTunes: [The Real Estate Espresso Podcast](https://podcasts.apple.com/ca/podcast/the-real-estate-espresso-podcast/id1340482613)   Website: [www.victorjm.com](http://www.victorjm.com)   LinkedIn: [Victor Menasce](http://www.linkedin.com/in/vmenasce)   YouTube: [The Real Estate Espresso Podcast](http://www.youtube.com/@victorjmenasce6734)   Facebook: [www.facebook.com/realestateespresso](http://www.facebook.com/realestateespresso)   Email: [podcast@victorjm.com](mailto:podcast@victorjm.com)  **Y Street Capital:** Website: [www.ystreetcapital.com](http://www.ystreetcapital.com)   Facebook: [www.facebook.com/YStreetCapital](https://www.facebook.com/YStreetCapital)   Instagram: [@ystreetcapital](http://www.instagram.com/ystreetcapital)