🚨 The Japan Carry Trade Is Now Officially Breaking August PPI just printed 5.4%, hotter than expected. Core hit 4.6%. July got revised up too. That’s wholesale inflation still ripping through the system. The 10-Year Treasury Yields have just broken 4.9% despite Scott Bessent’s multiple bond buybacks. The U.S. stock market opened with a lot of bleeding. Mortgage rates, auto loans, corporate borrowing.. all getting more expensive in real time. Warsh now has even less room to stay on hold. The part that turns this from ugly to dangerous is Japan. Bessent already did everything to prevent the nightmare version: sold dollars and euros to buy yen, warned the Fed to expand FIMA facility to Japan, dared traders to short the yen as he claimed “I am the House now” and has asymmetric intel about BoJ and Japanese policymakers. All of this so Japan wouldn’t aggressively hike interest rates and dump its $1.4T Treasury pile. Then, the shocking reply from BoJ’s @yutokanzakireal came in: “They say, the house always wins. This time, Japan isn't just betting against the house. Japan is taking down the entire house. This time, the entire system is getting margin called.” This is not just “inflation came in hot.” This is hot inflation + energy shock + fiscal fireworks + the world’s biggest carry trade starting to snap. The data just made that path more likely. The backstop may not be enough.