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2025-09-12 20:22:34
[Citi: Japan-US investment funds may prompt Japan to use its US Treasury holdings to create a mini Mar-a-Lago agreement] Citigroup analysts pointed out that the $550 billion investment fund as part of the tariff agreement between Japan and the United States may make large-scale use of Japan's $1.3 trillion foreign exchange reserves. US Treasury bonds are a core component of Japan's foreign exchange reserves. Citi analysts believe that Japan's use of these US Treasury bonds may trigger a chain reaction, leading to an increase in long-term US Treasury yields. This in turn may prompt the United States to pressure Japan to extend the maturity of its US Treasury holdings. "We do not expect a major shift in multilateral exchange rate policies that would lead to an outcome similar to the 'Mar-a-Lago Agreement', but there is a possibility of reaching some kind of bilateral 'mini Mar-a-Lago Agreement'," Citi analysts Osamu Takashima and others pointed out in the report. "From the perspective of exchange rate policy, we believe that it will continue to tilt towards a weaker US dollar and a stronger yen."
