I listened in on a webinar today about the future of the Yen and JGB markets. Generally, the speakers were in agreement that the Yen would continue to weaken (and eventually so will JGBs), which syncs with my view. But the knock-on consequence that was mentioned, and which was a new twist for me, was that all the Yen liquidity to come would need a deep market to go into, and one possible venue would be U.S. Treasuries. The implication is that rates in the U.S. are likely to stay low for a while (which reminds me of one argument from the Richard Duncan book).
The other point is that a currency crisis sets off a debt crisis (and vice versa). If interest rates start to kick up and the Central Bank tries to defend the market by printing endless currency units to buy bonds, the resulting devaluation of the currency increases inflation expectations and thereby causes rates up anyway.
As far as timing, the Yen will crack first, so get long some long-dated Yen puts as a first step. The other really compelling idea is to figure out a way to get short Yen in gold terms (which is not easy to execute at this point).
