Japanese finance minister says selling U.S. bonds a "card on the table"

Everyone now knows that the bond market has a unique sway on President Trump's policymaking — and a subtle, but important, threat from the Japanese government could move his stance on trade with a crucial ally.Why it matters: Japan is the largest foreign holder of U.S. Treasuries, and even the vaguest hint that it could dump those holdings is powerful leverage with the administration. Following through on the threat could cause interest rates to spike.Catch up quick: Japanese Finance Minister Katsunobu Kato said Friday that the country's $1.13 trillion in Treasury holdings were a "card on the table" in trade talks, The Associated Press reported."It does exist as a card, but I think whether we choose to use it or not would be a separate decision," Kato said on a Japanese TV broadcast, per the AP.It's a noteworthy shift in the government's messaging, given a historical reticence by Japanese leaders to even mention that such a threat could exist. The Financial Times described it as a "rare baring of teeth."State of play: If Japan or other major holders of Treasury securities started dumping them, it would likely drive up U.S. interest rates. That would, in turn, make financing massive U.S. budget deficits more onerous and strain homebuyers and corporate borrowers.The Japanese government wasn't quite threatening to do that, but even acknowledging the possibility represents a surprising turn of events.That said, the strategy could carry costs and risks for the seller, as well, by potentially tanking the value of their own bond holdings and causing massive disruption through currency markets.Zoom out: Japan is one of the five largest U.S. trading partners, as well as a rock-solid ally in the region, so there was some surprise when the U.S. hit the country with a 24% reciprocal tariff in early April. Getting a deal done with Japan became one of the first priorities of trade talks after Trump paused most of his global tariffs. Within days, Japan's trade minister was at the White House negotiating with Treasury Secretary Scott Bessent and Commerce Secretary Howard Lutnick. Yes, but: Progress has been slow, amid reports of a standoff over tariffs on the auto industry, which is crucial to Japan. Between the lines: As U.S. Treasuries sold off last month and yields spiked, there was speculation foreign governments might be dumping bonds.J.P. Morgan Private Bank, in a research note last week, said there were signs of foreign selling pressure, but from private holders, as opposed to governments "weaponizing" their holdings. The intrigue: Kato's choice of words — describing the Treasury holdings as a "card" to be played — appears pointed.In his now-famous blow-up with Ukraine's Volodymyr Zelensky in the Oval Office earlier this year, Trump warned him "you don't have the cards right now."The bottom line: Japan does — and playing them could be devastating.

Comments

World news

Huge £848m Trump Tower in city loved by UK tourists will have world's highest sky pool

Comments

Similar News

Snake halts Japanese bullet trains after wrapping around power line

U.S. Navy secretary tours South Korean, Japanese shipyards

They bought an abandoned 'ghost house' in the Japanese countryside

Terrifying new giant railgun unveiled by Japanese Navy as futuristic hypersonic weapon uses magnets to fire at 5,600mph

Japanese student has visa reinstated after it was revoked by potential AI mistake

China executes man who stabbed Japanese school boy

Cambodia welcomes Japanese navy ships to naval base that U.S. suspects is for China's special use

Japanese leader hopes Osaka expo will help reunite a divided world

Japanese leader says he hopes Osaka expo will help reunite a divided world

Japanese badminton star in China pleads with fans to ‘stop the stalking’

Japanese emperor visits Iwo Jima to honor the dead in one of WWII's fiercest battles

Japanese emperor visits Iwo Jima to honor war dead 80 years after one of WWII's fiercest battles

World news

Huge £848m Trump Tower in city loved by UK tourists will have world's highest sky pool

The incredible new £1.15bn city that wants to be the 'Europe of Africa'

US gives initial approval for $3.5 billion missile sale to Saudi Arabia before Trump's planned visit

Cops hunt for killer after Arizona pastor, 76, is found murdered on his bed with his hands pinned to the wall

Federal judge bars Trump’s ‘unconstitutional’ retaliation against law firm Perkins Coie

Disastrous 2nd period sinks Winnipeg Jets in 5-2 Game 6 loss in St. Louis

Blue Jays vet Springer has “clear mindset”

Virginia Giuffre’s family launch fundraiser and share plans for sweet memorial

Co-op issues apology following cyber attacks

India and Pakistan are in crisis again - here's how they de-escalated in the past

'I saved my ID card and my dog': Israel expands demolitions of West Bank refugee homes

The country that France shares its longest border with - it isn’t in Europe

Turkish Cypriots protest over what they say is Turkey's introduction of Islam into education system

Sudan's Rapid Support Forces paramilitary claims it took control of a strategic western town

Puerto Rico authorities rescue 3 US tourists stranded in river as heavy rains persist

Australians vote in election with high prices and shortage of housing major issues

Brazil's social security minister steps down amid pension fraud investigation

Mental health assessment ordered for man accused of killing 11 at Vancouver festival

How the democracy sausage, a polling day snack, became Australia's election symbol

Polls open in Singapore's election as its long-ruling party seeks a bigger win

Costa Rica looks to El Salvador in announcing new prison and tough-on-crime reforms

‘Huge injustice,’ says family after driver in fatal Peace Arch border crash walks free

WATCH: Global News Hour at 6 BC: May 2

Campaign to raise awareness for first responder mental health across Canada

Man who kept angry crowd back from suspect at Lapu Lapu festival says it was right to do

WATCH: Global National – May 2

Lukes’s two-run single lifts Jays over Guardians

WATCH: Global Okanagan News at 5:30 p.m. – May 2, 2025

Ukraine troops to join British forces for VE Day procession

Harvey Weinstein accuser breaks down in tears on witness stand - and swears at his lawyer

Drone attacks are intensifying in Sudan - hitting schools and camps homing the displaced

Australia heads to polls in cost-of-living general election

How Canada's Conservatives threw away a 27-point lead to lose again

How ordinary Poles are preparing for a Russian invasion

Military parade to honour US Army will fall on Trump's birthday

Trump will unfreeze Maine funding after trans athlete lawsuit: ‘We took him to court and we won’

Trump to eliminate 1,200 CIA positions within larger plan to shrink spy workforce: report

Former Abercrombie & Fitch CEO is ruled unfit for trial and ordered hospitalized

Videotaped woman whose racial slurs against child went viral raises $300k online

Saskatchewan Rush prepare to kick off NLL semifinals on the road in Halifax

Lethbridge Hurricanes reflect on 2024/25 season

City of Calgary to charge for parking at Edworthy Park, paving plans concern residents

Search underway for 3 orphaned cubs after bear killed in Whistler for biting woman

Inquest into UVic student’s drug death hears from 911 operator who took the call

Saskatchewan’s front-line physicians press ministers for action, answers

Ukrainian soldiers to join London’s VE Day march

Australia heads to polls in cost-of-living general election

Trump order targeting law firm is illegal, federal judge rules

Trump says short-term recession OK: "This is a transition period"

Germany defends AfD extremist classification after Rubio slams 'tyranny in disguise'

'Unparalleled' snake antivenom made from man bitten 200 times

Australians vote in election, with high prices and housing shortage major issues

In Singapore’s Election, All Eyes Are on the Margin of Victory, Not the Winner

Mixed economic data puts Trump’s domestic agenda at risk

U.S. charges 4 Mexicans for alleged human smuggling across Canadian border

‘Priceless’: More cannons, century-old machine guns discovered at PNE in Vancouver

First Nations in Alberta, Saskatchewan vow to oppose any efforts to separate Alberta from Canada

Albertans urged to be fire smart heading into hot, dry May weekend

Winnipeg Jets recall prospect Brayden Yager from WHL

Saskatchewan premier Scott Moe meets with Prime Minister Carney after election