JAPAN PERSPECTIVE

The Japan Times published a technical but strategically loaded analysis of the Warsh succession. Japan is the largest foreign holder of US Treasuries (approximately $1.1 trillion), and any shift in Fed rate policy directly impacts the value of that portfolio and the yen-dollar exchange rate. The Bank of Japan, which is just beginning to normalize its own rate policy after years of negative rates, will need to adapt to whatever direction a Warsh-led Fed takes. Tokyo analysts noted: if Warsh cuts rates faster than Powell, a weaker dollar versus yen would hurt Japanese exporters — a considerable risk for Japan's export-dependent economy.