Contagion risk from Japanese government bond stress and yen volatility could spill over into the US Treasury market and destabilize the global financial system

"The veteran currency trader may have feared that volatility in JGBs could spill over into the U.S. bond market at a time when longer-term yields were already hitting multi-decade highs... any unraveling of the ties that bind the world's two biggest bond markets and the world's second-most important exchange rate could ripple through the financial system in unexpected and dangerous ways."

"Markets face a perfect storm: extreme weakness in the yen, stress in Japanese government bonds (JGBs) and parts of the Treasury curve, and credibility issues at both the Federal Reserve and Bank of Japan."