“It Was A Deer In Headlights Moment”: Japan Dumps Most US Treasuries Since May 2013

 

With the December monthly TIC data due out this week, bond traders will be closely watching if the selling of US Treasuries by foreign accounts, and especially central banks, which as we have repeatedly shown for the past several months has hit record levels…

However, this time the surprise may not be China, but its nemesis across the East China Sea, Japan. Continue reading

Bank Of Japan’s Plunge Protection Desperation: “May Buy Individual Stocks”

Earlier this month, the BoJ surveyed 40 dealers and discovered something shocking: buying the entirety of JGB gross issuance has had a rather dramatic effect on liquidity. In fact, two thirds of the firms who participated reported having “some or a lot” of problems and described bid-asks as “not very tight.” Today, an internal report from the central bank indicates officials are slowly coming to accept the fact that their actions have consequences although as you can see from the following, the fact that the BoJ is literally buying all of the bonds is still low on the list of factors the central bank figures might be negatively affecting liquidity… Continue reading

Veteran fears ‘beginning of the end’ for Japan as bond market buckles

Yields on 10-year Japanese bonds (JGBs) have doubled in a month and spiked dramatically to 1pc on Thursday, triggering a 7.3pc crash in the Nikkei stock index. It was the biggest one-day fall since the tsunami two years ago, comparable with wild moves seen at the height of the Asian crisis in 1998.

Richard Koo from Nomura, an expert on Japan’s Lost Decade, said the sell-off in recent days has shown that the BoJ may not be able to hold down yields “no matter how many bonds it buys”. This could lead to a “loss of faith in the Japanese government” and the “beginning of the end” for its economy, if handled badly. Continue reading