Japanese Bank Gets SVBed

How many bonds can you fit on a balance sheet? How many Mexicans can you fit in a clown car?

• Treasury withdrew $146B from banking system after Tax Day June 17, affecting repo rate, we'll see about RRPs tomorrow since markets closed for "Juneteenth", a holiday commemorating who knows what or why.

• Japanese bank Norinchukin to sell $63B in bonds due to losses, will probably trigger bond selling avalanche from foreign Treasury holders to front-run the announcement.

• 92 years between the major Panic of 1837, which led to an 8-year depression ended by a gold rush, and the Panic of 1929. Panics in between were relatively minor.

• It's been 91 years since the current credit pyramid began being built, back in 1933. Benjamin Roth sees the very beginnings of it in his diary.

Treasury Sucks $146B Out of the Banking System Yesterday

About $100B in taxes and the rest in miscellaneous theft, bribes, extortion, protection and other crap. The repo rate jumped a bit on the vacuum, but no signs of a monetary clog yet. We'll see what the repo rate is tomorrow, since markets are closed today for something called Juneteenth, which sounds like something someone having a tooth extraction would say with a mouth full of Novocaine and cotton balls.

Japanese Bank To Sell $63B in Bonds in Desperation

Norinchukin, a Japanese bank I have never heard of until yesterday, is experiencing a Silicon Valley Bank moment. Bloomberg:

…The bank "acknowledged the need to drastically change its portfolio management" to reduce unrealized losses on its bonds, which totalled roughly 2.2 trillion yen as of the end of March. As of the end of March, Norinchukin had approximately 23 trillion yen of foreign bonds, amounting to 42% of its total 56 trillion yen of assets under management.

Thing is, Norinchukin holds about 20% of all foreign bonds held by Japanese banks. How do you think the banks holding the other 80%, also sitting on major losses, will react to the news the top holder is going to dump them all within the year? Probably nothing. Nothing at all. Sure.