Gnosly

AI firms and the US government are competing for capital:US Treasury issuance excluding T-bills has risen to $5.06 trillion over the last 12 months, the highest since the 2021 record.Over the same period, corporate debt issuance has surged to a record $2.64 trillion.This brings total Treasury and corporate debt issuance up to $7.70 trillion, an all-time high.This is increasingly driven by AI-related firms, whose bond issuance has soared +541% YoY in 2025, to $109 billion, and another +78% in the first half of 2026, to a record $194 billion.In other words, corporate America is funding one of the largest investment cycles in decades while the US government is running historically high deficits, forcing both public and private borrowers to compete for capital.This competition is adding to other forces pushing long-term yields higher, including inflation, Fed policy, and economic growth expectations.The US bond market is entering an era of intense capital competition.

🔴 The Bank of Japan delivered a hawkish message, reaffirming that it will continue raising interest rates as growth and inflation evolve. Yet the yen weakened immediately after the announcement.The market’s verdict was clear: 25 basis points is not enough.Even with the policy rate now at 1.25%, the interest-rate differential remains wide—and so does the incentive to borrow in yen and invest in higher-yielding currencies.If Japan wants to support the yen without hiking more aggressively, it may have to return to FX intervention: selling dollar assets and using its reserves to buy yen.But intervention only buys time. It does not solve the underlying rate gap.The longer the BOJ waits to close that gap, the more aggressive future rate hikes may ultimately need to be.Key details:1. BOJ voted 7-2 in favour of raising interest rates to 1.25%.2. BOJ warns underlying inflation could rise above its 2% target.3. Inflation pressure is spreading from producer prices into consumer prices.4. Inflation expectations continue to rise.5. Wage increases are increasingly being passed into selling prices.6. Weak yen, higher oil prices and strong AI-related demand are adding inflation pressure.7. Japan’s economy is still recovering moderately, supported by employment, income growth and AI-related demand.8. CPI is expected to accelerate clearly above 2% from the second half of FY2026.9. BOJ still says financial conditions remain accommodative despite the hike.10. Future hikes will depend on economic activity, prices and financial conditions.Governor Ueda’s remarks will be closely watched for clues on the timing and pace of further hikes.Source: Bull Theory

BOJ rates decision in few hours, I hardly think they are going to do anything different from what they did for the past four decades because that the only thing they can do unless they want to put the reset button of Japan Financial System, reboot it and rebuild it from the ashes