Japan Earthquake Effects

Death tolls from last Friday's catastrophic earthquake in northern Japan have now topped 10,000--a number that is almost certain to rise significantly higher. The country is now working to stave off additional disasters at a couple of nuclear power plants that have experienced reactor damage.

Last night the Nikkei sold off more than 6%. The Bank of Japan (BOJ) injected  $200+ billlion billion of 'liquidity' into the financial system in the form of short term money market credit, and asset (bond and ETF) purchases.

In the midst of the BOJ's money printing, the yen actually rallied last nite. As explained here, one reason for this is that there is an immediate need for cash in Japan. People who have have purchases risky assets with yen borrowed at uber cheap BOJ rates (a.k.a. 'the yen carry trade) are now looking buy those yen back to shed risk and whether the economic storm.

Stateside, there has been some fear that Japan might start unwinding its huge stash of US Treasury debt in order to raise more cash. Thus far, the aggressive BOJ monetary actions appears to have stemmed any predilection to liquidate US bonds.

This is a dynamic situation that requires careful watching.

position in TLT