Nomura

Turkey Lashes Out At Moody's After Downgrade To "Junk" Sends Turkish Assets Plunging

Turkish assets plummeted the most since an attempted coup in July and credit risk climbed after Moody’s Investors Service cut the country’s sovereign rating to junk. The immediate response by the Turkish administration was to lash out at Moody's calling the decision "politically-motivated", after a similar downgrade by S&P led Erdogan to acuse the agency of siding with coup plotters.

"Disappointing And Underwhelming" - An Unhappy Wall Street Reacts To The BOJ's Latest Announcement

Just after midnight east coast time, the BOJ presented its new and improved monetary policy dubbed “QQE with Yield Curve Control,” in which the central bank said it would buy JGBs such that 10-year yield remain at the current level of around zero percent. The BOJ will also buy JGBs at designated yields, and generally steepen the curve even as it failed to lower rates or add more QE. Wall Street took one look at what the BOJ came up with... and hated it immediately.

Japan Q2 GDP Misses, Unchanged From First Quarter, As Business Spending, Exports Slide

After a flurry of disappointing GDP reports from the US and Europe, not to mention last week's uniformly poor Chinese economic data, Japan was the latest country to report that nominal economic growth in the second quarter rose a disppointing 0.2% annualized, missing expectations of a 0.7% increase, and down from the revised 2.0%  GDP growth in Q1, while on a sequential basis GDP was flat with the first quarter.

The Bank of Japan Will Be The Top Shareholder Of 55 Companies By The End Of 2017

With the BOJ already a top-five owner of 81 companies in Japan’s Nikkei 225 Stock Average, the BOJ is on course to become the No. 1 shareholder in 55 of those firms by the end of next year. Just as insane, the central bank owned about 60% of Japan’s domestic ETFs at the end of June. This is up from just over half as of a few months ago suggesting that the BOJ is gobbling up equities at an unprecedented pace.

Insanity, Oddities, And Dark Clouds In Credit-Land

Distortions in financial markets keep growing, as central banks all over the world are desperately intensifying monetary pumping. What is currently happening in various bond markets as a result of this and other interventions is simply jaw-dropping insanity. It is not so much that it defies rational explanation – in fact, all of these moves can be explained. What makes the situation so troubling is the fact that investors seem to be oblivious to the enormous risks they are taking.  They are sitting on a powder keg.

Angry Chinese CFO Kicks Out Analyst Who Rated Company A "Sell"

A CFO threw an analyst out of a company presentation in Hong Kong because he disagreed with the analyst’s negative views (not to mention his Sell rating), in a vivid example of a company lashing out personally and publicly against its critics.

Frontrunning: August 10

  • World stocks hit one-year peak, dollar sags on weak U.S. data (Reuters)
  • Trump's remarks on gun rights, Clinton unleash torrent of criticism (Reuters)
  • Newly Released Emails Highlight Clinton Foundation’s Ties to State Department (WSJ)
  • One-in-five U.S. Republicans want Trump to drop out: Reuters/Ipsos poll (Reuters)
  • Soaring Debt Has U.S. Companies as Vulnerable to Default as 2008 (BBG)
  • BOJ to defend QQE in Sept policy assessment (Reuters)

US Futures Flat; Bonds Rise, Dollar And Oil Slide Over US Productivity Collapse Fears

Following yesterday's muted action which saw the S&P500 close unchanged, it has been more of the same listless trading overnight, with US equity index futures little changed as the Nikkei fell on the back of a stronger Yen, while government bonds rose and European stocks reversed early gains following the BOE failed bond monetization operation. Crude oil dropped for a second day after Saudi Arabia told OPEC that it pumped a record 10.67 million barrels of oil a day,

August Corporate Bond Issuance Breaks All Records Thanks To Relentless Demand For Yield

It has been a scorching August for the continental US, with the government predicting, for the first time on record, that every square inch of all 50 states is forecast to see above-average temperatures for the next three months. However, that is nothing compared to what is taking place in the blistering bond market, where new bond issuance is on pace to blow away all records.

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.

Japanese Government Bonds Are Crashing

Ahead of tonight's 10Y JGB auction and reportedly the unleashing of Abe's fiscal stimulus, it appears the world's investors are losing faith in the Bank of Japan's buying power and the MoF's credibility as Japanese government bonds are collapsing for the 3rd day in a row. With the biggest crash in prices (JGB Futures) since May 2013 (back to 5 month lows), yield across the entire JGB curve are exploding higher since Kuroda punted last week and questioned monetary policy effectiveness.