The BOJ has now cut it's balance sheet by $502 billion dollars. Intrest rates are the highest they've been since 1995, which is shocking because they are still only .75%

My perspective:

We've all heard about fiscal dominance, I'm sure, and part of what helped keep that party going was China and Japan buying up all of that debt to keep their currencies cheap. Both countries have called it quits on that experiment, and when that debt doesn't get bought, the 10 year yeild goes up.

Higher yeilds on the 10 year gets us higher intrest payment in the massive government debt. On top of that, when Japan dumps treasuries in the market the US banks rhst hold treasuries start to get a bit shakey, (Silicon Valley Bank ring any bells?) and the fed is forced to step in.

There's no way they can let the US government go insolvent, or allow the banks to fail, their hands are tied. I doubt the 40 billion they're printing right now to grease up the SRF is going to do the trick long term, especially with record $75 billion spikes in the repo market.

My guess, the fed will hold out until the last minute, or worse, wait until after a crisis already starts before they turn that printer up, but their hands are tied on this one. Expect markets to struggle as liquidity dries up before the fed starts QE or YCC or whatever name they want to give it.

Q2 will be the normal April (tax time) liquidity squeeze and May/June the government will choke the market with debt issuance that doesn't have enough buyers.

If you listen closely, you can almost hear the printers idling. The winter is chilly, you dont want the engine screaming before you let it warm up.