How Does The Economy Affect Japan's Economy

Japan’s economy affects the U.S economy in many ways. One system is known as the Yen-Carry Trade. The Yen-Carry Trade is a system in which the Japanese Yen has a low interest rate and a low valuation. Meanwhile, the value of the U.S. dollar rises. The yields on Japanese government bonds have been near zero so yield-hungry global bond investors turn to U.S Treasury securities. Japan is over $1.2 trillion in U.S government debt but they may invest $300 billion more into treasures in the next couple of years. Lastly, the U.S. economic policy for Japan is to increase access into Japan’s two-way investments and markets, promote economic restructuring, raise the living standards of both Japan and the U.S., stimulating domestic demand-led economic growth and to improve the climate for U.S. investors.

A cheaper Japanese yen, a higher U.S dollar; which creates a higher U.S bond market. Both countries have higher yield bonds which increases their market values. The yields on Japanese government bonds have been near zero so yield-hungry global bond investors turn to U.S Treasury securities. In this way, the U.S. economy grows. Triple profits happen when there is a leverage of 100:1 meaning that when there is a 1% increase in the value of the dollar vs. yen that doubles the value of the equity investments. Also, if the U.S. Treasury-bonds increase their prices there will be additional profits made. When there is a positive carry, additional profits are made which is why it is called a triple