Japanese yen currency rate is critical for US election result

Japan is the top holder of US treasury

As you see graph in the above, Japan is the largest holder of the US Treasury. It was China before, but not anymore. For more than decades, In Japan, they have even minus interest rates so that Japanese investors can borrow money from domestic banks with a minus or lower interest rates and invest in the US Treasury or other foreign assets. This is the reason Japan became the largest holder of the US Treasury. However since US Fed has increased interest rates, the situation has changed over time. As the US Fed increased its interest rate, the Japanese Yen currency rate became weaker than before. As they have weaker Yen, the price of products from imports is increasing. Right now This causes slight inflation in Japan domestic market.

A weak Yen will bring higher domestic inflation in Japan

With unstable geo-political status and weaker Yen bring inflation to Japan. BOJ recently defended at the 160 yen-1 dollar point. If Yen becomes more weaker than 160 Yen - 1 Dollar point, BOJ doesn't have choices and then they have to increase the interest rate(this option will make worse for Japanese Gov Debt) or they have to sell US dollar currency from their Japanese Reserve to defend 160 Yen point. As of March 2024, Japan owns $1.164 trillion in US dollar reserves. But this kind of direct intervention should be cautiously executed by considering international relations or domestic economic impacts.

This will make the volatile bond market in the US

If the Japanese move slightly to sell the US Treasury even with a small amount of them will make the US bond market volatile. Once the bond market becomes volatile. The price of bonds will be decreased and the yield of them will be increased. The long-term US Treasury yield increases then the S&P500 and Big Tech 7 stocks will have a higher discount rate to make those stock prices decrease. This means "The collapse of the Stock market". Biden Gov wouldn't want this kind of situation. If stock market is collapsed in the three month before US Election, Biden Gov will be defeated.(To win over the election, The department of Tresuary will provide the enormous liquidity in the market soon, 3rd Quarter, 2024) The evidences in the history are proven. This is the reason why the Japanese Yen currency rate is critical to US election results. Let's see how it goes.