US stocks plunged actually due to Japan? Societe Generale Bank: The surge in Japanese bond yields is the biggest risk signal.

Albert Edwards, the strategist of Societe Generale who calls himself a "super bear," expressed concerns that investors worried about the sustainability of the US stock market should pay attention to Japanese bond yields. Edwards had already warned back in May that the surge in Japanese bond yields was the biggest risk facing the global market since the system of low bond yields that began following the 2008 crisis. In his commentary, Edwards stated, "While investors are focused on the performance of NVIDIA Corporation (NVDA.US) and delayed US economic data, the single most important development in the current market is the surge in Japanese government bond yields... The Japanese 10-year government bond yield has surpassed 1.82%. Is this the factor that will end the stock market bull run?" Edwards believes that Japan has historically been an early warning point for major financial turning points and added that Japanese institutions may repatriate funds domestically, reversing the trend of years of arbitrage trading and heavy purchases of foreign bonds (including US treasuries) financed in yen. Edwards warned that the US market could be vulnerable due to the continued inflow of funds from Japan benefiting both US treasuries and stocks. He stated that if the rise in Japanese government bond yields prompts domestic investors to repatriate, the withdrawal of funds could severely impact US assets and put pressure on the US dollar.