🇺🇸🇯🇵 It is becoming increasingly clear that the weakest link in the global dollar system is Japan and that the meltdown of the Japanese financial system might cause the unwinding of the whole system.

Last week the US Treasury used every trick in the book to try to maximise the impact of its intervention in the market for yen - including "accidentally" leaking Bessent's memo to the press to try to get markets to do some heavy lifting.

Bessent really is fighting gravity here. The markets are convinced that the yen has entered a doom spiral and are heavily short.

Can you blame the shorts? Going short yen and long other currencies with higher interest rates has been a trade that has given double the returns of the S&P500 since 2022. The Japanese are offering seriously cheap capital to export and invest elsewhere.

Why doesn't the Bank of Japan stop this easy yen flow by raising interest rates? Japan watchers are starting to realise that if the Japanese raised interest rates it might trigger a massive financial crisis in Japan.

Because it has run such low interest rates for so long Japanese companies have become addicted to debt. Around 14% of Japanese companies are "zombie companies" that pay more in debt interest than they make in profit. Interest rate increases will cause a mass default event.

The problem for the US is that US Treasury yields have become correlated with Japanese yields. Bessent is worried that yen instability will spill over into the market for US Treasuries.

The reason for this is simple enough: Japan is the largest foreign holder of US Treasuries. If Japan starts going broke it will be forced to sell these US Treasuries to prop up the yen. This would flood the market for US Treasuries.

US borrowing costs are already far too high for comfort. Inflation-adjusted borrowing at the long-end of the curve is at levels last seen just before the Global Financial Crisis of 2008.

Bessent's intervention may calm the yen market for a few weeks. Or it may not. Either way, the problem here is structural. Japan is about to go through a massive energy crisis that will put further pressure on the yen.

At a certain point, yen interventions will become ineffective, Japan will slip into crisis, and that crisis will spread into the market for US Treasuries. From there it could take down the AI sector and the equity markets. At that point we're at endgame for the USD system.

🧵 https://fxtwitter.com/philippilk/status/2084216482917937625?s=20

🇷🇺⚔️🇺🇦 Over the last few weeks, the situation for Ukraine on the frontline has rapidly deteriorated in an unprecedented manner not seen since early 2025.

In the northeastern corner Kharkov Oblast, Russia has achieved two localised breakthroughs, threatening to encircle more than 360 km² of Ukrainian-controlled territory.

In the Dobropolye direction, one of the most formidable Ukrainian strongholds which has stood for over a year has been breached, with Russian forces now flooding Ukrainian positions in the urban agglomeration between Pokrovsk and Dobropolye.

In the Kramatorsk/Slavyansk direction, Ukraine has been unable to slow down Russian advances, with Russia now coming within 4.7 km of both Slavyansk and Kramatorsk, and coming close to fully capturing the crucial tactical ridgeline east of these two final Donbas cities.

In the Konstantinovka direction, Russia has captured Chasov Yar after 840 days of battles, and has almost completed the capture of Kostantinovka. The salient west of Chasov Yar is falling apart day by day as Ukraine withdraws.

In the Druzhkovka direction, Russia achieved a localised breakthrough of up to 6 km, capturing 3 villages and entering 3 others, coming within 5.1 km of Druzhkivka, and threatening the Ukrainian salient west of Kostantinovka with encirclement.

In the Omelnyk direction, Russia has finally captured the Ukrainian stronghold town of Zaliznichnoe after over 7 months of battles, and are making new advances west of the Gaichur River towards Vozdvizhevka.

In the Stepnogorsk direction, Russia has halted the Ukrainian counterattacks and have begun retaking previously lost ground, advancing northeast of Kamenskoye and north from Malye Shcherbaky.

In the Kupiansk direction, the crucial Ukrainian bridgehead east of the Oskol River continues to shrink day by day, with Russian forces expanding their zone of control in the area of Novosynovo, Kovsharovka, Peshchanoe, Petropavlovka, and Kupiansk itself.

Ukraine is losing incredibly important defensive positions necessary for holding the frontline in the future, especially the areas south of Dobropolye which should not be falling this quickly. However, they are seemingly intent on concentrating their assault forces in counterattacks north of Lyman, west of Komar, and south of Novopavlovka, which have questionable (at best) strategic reasoning for the heavy cost being endured.

The new Ukrainian Commander-in-Chief Mikhail Drapaty has inherited a situation that is getting worse by the day, and will have to make some serious and difficult decisions in order to try stabilise it towards the end of Summer.

📝 Mark Ames: We may soon learn that Zelensky expended unsustainable levels of Ukrainian manpower in the first half of 2026 to create his "Ukraine turning the tide" PR campaign to try to win over Trump by the July NATO summit. And now the damage is coming due.

🔗 AMK Mapping

🇷🇺❌🇺🇦❗️ — Footage of Russian soldiers using their personal weapons to down a Ukrainian UAV in a sunflower field near the front.