Citadel CEO: Japan Bond Yields Surge as U.S. Sounds Alarm

January 23 — Kenneth Griffin, founder and CEO of multi-strategy hedge fund Citadel, warned at the World Economic Forum in Davos that Japan’s recent record-high government bond yields are a “clear warning” for the U.S. U.S. Treasury yields are now closing in on the dangerous 5% threshold. A 5% yield not only means U.S. bonds now offer returns competitive enough to match stocks, but also signals a fundamental shift in risk dynamics. Typically, bonds serve as a stable, low-risk anchor for portfolios. But when yields surge to levels matching stocks, risk-averse investors chasing stability face excessive risk. Griffin noted: “If the market ever loses faith in the U.S.’s impeccable creditworthiness, U.S. Treasuries will be treated as risky assets, triggering a simultaneous drop in both stocks and bonds. That will push the bond market to demand higher yields, which in turn lifts mortgage rates — ultimately making deficit financing far more costly for the U.S. While the U.S. isn’t yet ‘playing with fire,’ the window of opportunity for policymakers is shrinking.” (Source: Jinse)