TechFlow, on May 5, according to Reuters, Japanese Finance Minister Shunichi Kato, speaking in Milan, denied reports that Japan plans to threaten the sale of more than $1 trillion in U.S. Treasury bonds during trade negotiations. Two days earlier, Kato had suggested in a television interview that Japan might use its U.S. bond holdings as a bargaining chip, triggering brief volatility in global bond markets.
Kato explained that his earlier remarks were in response to questions about whether Japan could assure Washington it would not easily dump U.S. Treasuries, and he emphasized that the primary purpose of holding U.S. government debt is to provide the government with sufficient foreign exchange reserves to stabilize the yen when necessary. Meanwhile, the Bank of Japan kept its short-term interest rate unchanged at 0.5%, with Governor Kazuo Ueda stating that the timeline for achieving the 2% inflation target has been delayed due to new U.S. tariffs.
