Looks like the setup is finally aligning, and the data is starting to confirm what’s been building beneath the surface.
First, the bond market isn’t nearly as relaxed as many believe.
Yes, the MOVE Index — the bond market’s version of the VIX — has cooled recently, but that doesn’t signal safety. It looks more like a temporary pause than the end of volatility. The long end of the U.S. Treasury curve remains one of the biggest stress points as we head into the new year.
Second, foreign demand for U.S. Treasuries is no longer what it used to be.
China continues to cut exposure, and while Japan remains a major holder, its participation is becoming far more sensitive to currency pressure and policy shifts. In the past, issuance could clear even when foreign buyers hesitated. That cushion is now much thinner.
Third, Japan is no longer a side story.
Persistent yen weakness is forcing policy responses, and every move there ripples through global carry trades and sovereign bond markets. Carry trade unwinds never stay contained — the pressure spreads, and U.S. Treasuries are usually where it shows up next.
