Global liquidity drain persists; Japanese Yen plummets, signaling potential market distress and liquidity strain.

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Michael J. Kramer’s assessment was stark: “My global liquidity model shows that the drain is not over yet; bonds and stocks are affected.” His words echoed through the financial sphere, underscoring the severity of the situation.

“The Japanese Yen is getting completely obliterated this month,” the data revealed, painting a grim picture of currency devaluation. Plummeting to its lowest level in 34 years, with the potential to break 38-year lows, the Yen’s decline sent shockwaves through markets.

Behind the scenes, a high-stakes game unfolds. The estimated Yen carry trade, with investments totaling approximately $4.5 trillion, looms ominously over stocks and bonds. With the US stock and bond markets boasting a total market cap exceeding $100 trillion, the stakes couldn’t be higher.

As the Japanese Yen teeters on the edge, the Bank of Japan stands ready to intervene. But their actions could exacerbate the liquidity drain, further destabilizing markets.

Meanwhile, Republic First Bank’s collapse, with $6 billion in assets seized by regulators, adds to the growing unease. Signs of diminishing short-term funding market liquidity hint at the potential tightening of financial conditions.

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In this precarious economic landscape, the warning signs are clear: a serious liquidity drain is underway, and the implications are profound.

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