Japanese government bill yields influence US repo rates, revealing funding market and recession risks.

Japanese government bill yields influence US repo rates, revealing funding market and recession risks.

Repo fails make sense being an indicator of collateral difficulties. Same for the 4-week US Treasury bill rate when it falls substantially. But how does Japanese government bill yields fit into the US$ repo picture? And why are they such a solid fit for it? The answer lies in the carry trade and what it means for funding markets as well as US recession risks.

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