Bank of Japan

Japan's Top Credit Analyst Predicts 30Y Treasury Yield Plunging To Zero In 2 Years

In a time when one strategist after another is pointing to the latest rebound in rates and bond yields, and furiously declaring - to anyone who cares to listen - that this is it, yields are now and forever done going lower, Toshihiro Uomoto, Nomura Holdings’s chief credit strategist, in a report issued overnight, forecast that the yield on 30-year US Treasuries could plunge to zero in two years as a result of yield-starved "Japanese money" flooding the US and chasing returns of US Treasuries.

JGB Carnage Sparks Contagion Across Global Bond Market

Disappointing fiscal stimulus, loss of faith in The BoJ, and increasingly headless-chicken policymakers has sparked a sudden and severe rush for the exits from Japan's government bond markets. 10Y JGB yields exploded from -30bps to almost 0bps in the last 4 days - the biggest crash in prices in over 3 years. This bloodbath is roiling the rest of the global developed bond market with Bund yield spiking (+12bps in last 2 days, almost back to 0), Swiss, UK, and Danish bonds are all blowing out, and Treasury yields up 14bps since Friday alone.

Why Japan's "Massive" ¥28 Trillion Fiscal Stimulus Plan Was A Disappointment

Last week, when details of Japan's "massive" JPY28 trillion stimulus plan emerged, we pointed out the "minor" snag that assured the plan would be a disappointment: only about JPY7 trillion of this amount would be in the form of new spending. Overnight, Japan finally revealed the full plan, and as expected it was met with significant disappointment by the market, which sent the Yen soaring to new multi-week highs and saw Japanese bond yields surging .

Global Shares Slide As Japan Stimulus Disappoints, RBA Underwhelems, Italy Bank Fears Return

European stocks slid to a two-week low amid mixed earnings, as bank stocks extended yesterday’s decline as fears that Italy is not "fixed" have reemerged, not helped by an adverse market reaction to a disappointing Japanese fiscal stimulus announcement, while the AUD first dropped but then jumped after the RBA's priced in rate cut was announced, seen as underwhelming.

Satyajit Das Slams Policymaker Ignorance: "QE-Forever Cycle" Means Catastrophe Is Inevitable

"Policymakers have chosen to ignore the central issue of debt as they try to resuscitate activity," warns Satyajit Das in a shocking Op-Ed in today's FT, and with global central banks now printing $180 billion a month (and growing), "the global economy may now be trapped in a QE-forever cycle," confirming von Mises prescription that "there is no means of avoiding the final collapse..."

Euro Stocks Reverse Early Gains Dragged Lower By Slumping Banks; US Futures Flat; Crude Slides

Following last Friday's shocking weak US GDP print, Asian stocks jumped to an 11 month high on reduced prospects of a near-term rate hike, while the region also digested mostly encouraging in conflicting Chinese PMI data. European bank stocks initially rose following the release of the 2016 stress test then declined, tempering gains in global equity indexes, amid investor skepticism over the usefulness of stress-test results and weaker oil prices.

Frontrunning: July 29

  • Yen, bond yields rise as Bank of Japan action underwhelms (Reuters); Bank of Japan Takes Modest Easing Action (WSJ)
  • Hong Kong shares end lower as BOJ disappointment sweeps Asia (Reuters)
  • Accepting White House nomination, Clinton offers 'clear-eyed' vision (Reuters)
  • Two Conventions, Two Distinct World Views (WSJ)
  • Democrats Emphasize American Exceptionalism at Convention (BBG)
  • Clinton’s Image Among Democrats at a Historic Low (WSJ)

Pokemon 'No': Nintendo Suffers Worst Week In 27 Years

After admitting to investors last Friday (after the close) that they won't be able to rely on Pokemon Go to bolster profits, the company came clean this week that a widely anticipated accessory for the blockbuster app will be delayed until September. The effect is simple - Nintendo shares are down 27% this week - the worst week since Aug 1989 (when the exuberance over Super Famicom died). Thanks to this double Pokemon "no," Nintendo has lost over $14 billion of market capitalization in the last week.

With All Eyes On Tonight's BOJ Announcement, A "Minor" Snag Emerges

With all eyes on the BOJ's decision in several hours, an announcement which is expected to contain some component of government deficit funding attached to it, or helicopter-lite, a "minor" snag has emerged in what Japan has affectionately titled the "emergency, peace of mind realization, overall spending measures" fiscal package, namely that only about a quarter of the total JPY 28 trillion in new stimulus is in the form of actual spending.

USDJPY Surges On Headline Government Pressuring BOJ To Boost Stimulus; Bloomberg Denies

Update: Looks like we may have a lost in translation moment here, because shortly after the Reuters report (which recall is first and foremost an FX dealer and so loves USDJPY volatility), bloomberg reports that the "MOF draft statement cited by Reuters simply affirms that govt still plans a package." Hardly the dramatic "pressuring" of the BOJ Reuters would have its FX trading clients believe.