Bond markets in the US and Japan are flashing warning signs, which is bad news for stocks, the dollar, and anyone holding leveraged assets.

• The US 10-year Treasury yield hit a one-year high, and Japan's 30-year bond is at a record high, meaning investors want more to lend governments money.
• Japan has hinted it may sell its huge stash of US bonds to defend the yen, which would push US yields even higher and shake the dollar.
• Trouble in bonds usually shows up in stocks next, and US stocks are sitting at all-time highs with lots of borrowed money behind them.
• If stocks fall, gold, silver, and crypto are likely to fall too because they are tied to the same leveraged trades.
• The setup looks like 1929, when heavy debt after a pandemic-era boom led to a crash, except today markets move much faster.

Outlook: Expect more stress in bonds soon, and a stock pullback could follow quickly if Japan starts dumping US Treasuries.