A Japanese Wake-Up Call for America¶
WASHINGTON, DC—Japan appears to be on the cusp of a full-blown currency and bond-market crisis. Although the Japanese authoritiesspentmore than $70 billion in May to prop up the yen, the currency has slumped to a 40-year low and is estimated to be at least 15% undervalued against the US dollar. Meanwhile, Japanese long-term bond yields havesurgedto multi-decade highs following the end of the Bank of Japan’s yield-curve-control policy. And with no signs of Japan addressing the underlying causes of its currency’s downward spiral anytime soon, there is every reason to fear that the crisis will deepen.