Stay informed of free updates
Just register at Japanese business and finance Myft Digest – Delivered directly in your reception box.
The Japanese finance minister publicly identified assets of more than 1 TN from the country's American treasurys as a “card” in its commercial negotiations with the Trump administration, in a rare horsehair by the ally closest to America.
Speaking during a television interview on Friday, Katsunobu Kato was asked if Japan would use its traditional position as a non-seller of treasury bills as a tool in commercial discussions with Washington.
“There is like a card,” said Kato, adding that “whether we use this card is a different decision”.
Japanese holders, including the government, have 1.13 TN TreasuryThe largest treasure held by a foreign nation.
There is no suggestion that Tokyo is considering sales of official Treasury participation. But traders said that even the reference to an action such as a “card” could add to volatility on an American bond market which has been violently obtained since April 2, when Donald Trump announced radical “reciprocal” prices on American trade partners. Treasury bills were swept away in a wholesale of American assets before recovering part of their losses after Trump interrupted the prices for 90 days.
Analysts said Kato's comments were a natural reaction to the economic war threat by Trump's trade war, a reaction that the Japanese Prime Minister described as a “national crisis”.
“This is a street fight: promising not to use one of your strongest and brutal weapons would be both naive and reckless,” said Nicholas Smith, Japan chief strategist at CLSA. “You don't need to use the weapon: just brandish it.”
The status of Japan as the greater foreign holder of the treasure market could become even stronger as a negotiation tool if China decides to arm its own treasury assets in its commercial confrontation with the United States.
Kato's comments, who break with a long habit of prudence extremely on the subject, emerged just a few hours after the last series of talks in Washington between the chief negotiator of Japan, Ryosei Akazawa and his counterparts in the Trump administration, including the secretary of the Treasury Scott Bessent.
Discussions should now intensify in May, Akazawa indicating that a trade agreement may be possible in June. Diplomatic sources have declared that the meeting had included a discussion on the reduction of non-tariff barriers supposed to import American cars, as well as measures that Japan could take to reduce its significant trade surplus with the United States by widening energy and agricultural products.
“The fact that the Minister of Finance usually extremely kept and diplomatic expressed national television of what is undoubtedly the greatest asset of Japan in the treatment of America confirms the growing confidence of the elite of Japan in their relations with the United States,” said Jesper Koll, director of the online brokerage group Monex.
Kato was directly involved in negotiations with the United States and had bilateral talks with Bessent in the last week of April. The Minister of Finance emerged from this meeting without offering details on specific requests on the American side.
