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Nikkei Soars, Japanese Bond Yields Collapse On BoJ Front-Running
If there is one thing the Fed taught the world's investors it was to front-run them aggressively; and whether by unintended consequence or total and utter lack of belief that despite a 'promise' to do 'whatever it takes' to stoke 2% inflation the BoJ are utterly unable to allow rates to rise since the cost of interest skyrockets and blows out any last hope of recovery, interest rates are collapsing. Japan's benchmark 10Y (that is ten years!!) yield just plunged from 55bps (pre-BoJ yesterday) to 34bps now. That is a yield, not a spread. Nothing to see here, move along. Of course, not to be outdone, Japanese stocks (Nikkei 225) are now up 6.75% from pre-BoJ (3% today) trading at 13,000 - its highest since September 2008 (Lehman). But there is one market that is showing its concerns at Japan's inevitable blow up - Kyle Bass' 1Y Jump risk has more than doubled in the last 4 months.
and TOPIX vs JGBs...
meanwhile, in 30Y JPY Swaps...
and the long-end of the JGB curve is clearly getting whacked with technicals (or just simple old front-running on the BoJ's extension) as it is looking very 'deflationary' relative to FX and stocks...
as JGB 5s10s collapses back across its 20 year channel...
JGBs vs Trade Deficit...
and one of Kyle Bass' preferred ways to play Japan - through 1Y jump risk (CDS) - has more than doubled in the last 4 months...
Charts: Bloomberg
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The Bernak is drooling. Krugman just passed out.
Negative 10yr coming.
Krug and Ben are gettin' wood over these numbers and making side bets on Ben's next ramp....first though Ben needs to massage the peeps by sending out a few more Govenors to let us know that he's contemplating withdrawing QE sometime soon because of the "expanding" economy as Wally World hires 78 yo grandmas to stock their imploding shelves........message to the sheep.....buy buy buy....BANZAI!!!!!
13K was the announced target a few months ago. Good work Abe!!!
Next stop - Hyperinflation - End of the Line,
nah...just went limp....hang on baby!
le bernan'k
See, this is what happens when you smoke irradiated crack all day long.
Let me get this straight, assuming 2% targeted inflation, the real rate for a 10-year bond is -1.66% with a theoretical rate floor only 34 bp lower from here at -2%. I’d say prices are near a top, but logic and proportion have fallen sloppy dead.
A lower Yen is good for importers of Japanese bearings in Peru, just sayin'... At least for now. Time for us to plan another order!
After that, war.
Fuck you Bel-nanke....stupid fucking gaijin lound eye!
Risk became recklessness when people began to believe in the story that nationally housing prices can't go down. Similar story now. Risk has turned into recklessness because people believe Central Banks will do everything they can to prop up the market. That is until Central Banks no longer can (stagflationary spiral), then all those reckless bets implode.
Epic confetti printing. Truly heroic Japan, truly.
Hyperinflation has already been factored in.
The excess paper will be thrown on the Fukushima site for the nightly bon fire.
That's how you take out two monkey's with one banana.
Bitchezzz..
TEPCO: Cooling system not working at No. 3 spent fuel pool at #Fukushima-1 #nuclear power plant
May not need that paper after all.
I got it..
Japabwe!! no?
Zimjapabwe??
Or i guess the Japanese symbol for "banana republic"
What's a guy gotta do to get a good BoJ !!
The BoJ injected $200 bil per month and I.......
....jizzed in my pants.
When it fails Krugman will write an editorial on how Japan should have done moar.
Do Japanese housewives ever consider buying gold instead of Japanese bonds? I understand culturally they would never EVER buy equities, but is gold too much of a stretch? This might be a good time to do that. Take today's bond winnings, thank the BOJ, and put it into something else that has shown a stellar ability to hold it's value (which should go up considerably in nominal Yen terms as their currency crumbles).
I'm just wondering if such a change in allocation is even culturally acceptable at the ground floor over there. Or do they have to support their society (government), hell or high water, come what may? I know individuality and individual freedoms are not their strong suit but are they THAT into letting themselves and their families go down with the ship?
Hey Fonzarooli, just musing upon your entendre about bonditos....
Might just even get that negative 10 year "right here in River City"* what with the global rush to print... which Benji and the Minions will ultimately decide to join as per the Krugmanesque Prescription to Wealth and Freedom.
Then, just for shits and grins, throw in any unanticipated Major Big Fucking Global Problem. And for perspective thereupon, Lehman was but a mere second tier B brokerage firm, BTW. And its off to the Safest Port in the Storm will do at Any Price and va va voom,... the rush is on into the good olde US treasuries
Now, before you all scoff and bust a nad, remember just where the yields this very day are negative.
Japan... worse fiscal and monetary situation that here
Switzerland.... the whole SNB balance sheet is in Euros.. forgive me, but then invested in Euro denominated... fuck me with a monkey, probably a buncha pretty questionable crap...
Yup.
* h/t Robert Preston... Where is he when the world needs him?
God this is soooo fucked up.
Ah the olde days of Richard Nixon and Jimmy Carter appear quite sane compared to this shit...
You're gettin' it now. Everyone's in the same boat. Same problem. It varies from place to place only by degree (and timing, as was pointed out to me), not in it's structure.
* The Think System, bitchez!
"Oh, my dear little librarian. You pile up enough tomorrows, and you'll find you are left with nothing but a lot of empty yesterdays."
While Chinese are out of the GOLD market until Monday, Central bank ripoff getting started on Gold. Everyone of those clowns debasing their currencies at the fastest pace and yet, Gold must drop? Look here now: Just coincidental drop 3rd day in the row at the same time??? M*f*ckers!!!! http://www.kitco.com/charts/livegold.html
Neg yields would only hold if all other alternatives were worse - meaning you lose more in any other scenario than with a neg yield bond. They can only hold short term as well.
To me, I would short the living crap out of a neg yield bond - I would borrow from the fed and short unlimited quantities. Neg yields have to be short lived by nature - at neg 5% in 15 years you have basically lost almost all your money. At some point the bond is worthless, shorts win huge. A neg yield slowly degrades value until you have nothing left in the bond. Each year the bond value decreases by the amount of the neg interest, since that value has to be "paid"
If neg rates are so awesome then why dont some of these financial wizzies use CC debt to leverage their fund? Surely they are smart enough to overcome a "mere" 5.9% introductory rate compounded charge on the borrowings, right (assuming good credit lol) That is an excellent example of "negative" yield. CC companies make all, consumers lose.
Japan is staring down the edge of the cliff of insolvency. Place your bets wisely. The end may not come as soon as you think, because there will be a coordinated central bank rescue of the country. Japan is TBTF.
http://dareconomics.wordpress.com/2013/04/04/bank-of-japan-accelerates-m...
..and Gollums Fave is down...
FUBAR
BOJ throws a Shoryuken !
World reels...
Haduken!
Flont Lunning the BoJ. This is fun.
You must defeat Sheng Long to stand a chance
That reminds me.... I gotta catch up on the Naruto episodes on my DVR tonight. On second thought, perhaps something more appropriate to current times.... "Apocalypse Now" or better yet "Full Metal Jacket". .....I AM IN A WORLD OF SHIT.
So, if we hold burning paper under a plastic cup it will levitate...who would-a-thunk it?
The Nikkei 225 just breached 13,000. Banzai!!
Fly me to the moon...
Chairman of the Board, Frank Sinatra
http://www.youtube.com/watch?v=LiCsaMnhqo8
Or, maybe, it's Japanese My Way.
And now, the end is here
And so I face the final curtain
http://www.youtube.com/watch?v=6E2hYDIFDIU
I'm sure China is loving this <sarc> If this doesn't start a currency war, I don't know what will.
CME. What CME? Japan NI225 13118.50 12761.00 13218.50 12738.00 357.50
wow, the japanaese market makes the u.s market look like a real market, and that is extremely hard to do.
how the mother fucking hell is the nikkei up fucking 465 pts, nearly 4 percent on absolute shit economic data?
i guess it does not really matter because its not real.
u.s futures down a bit, i am waiting for it to drop a bit more only to wake up tomorrow morning and see it up like 200 pts on dow.
cant wait for the excuses tomorrow from all the analysis when the employment number and all the data fucking blow.
The liftoff is truly majestic. The question is whether they can achieve orbit or simply burn up on re-entry.
Its all liquidity effect, textbook style.
To which the equity managers and talking heads will indeed ascribe a wonderful world...
Propagandizing the cause and effect.
Krugman will have a boner all night.
Why those f*cks not buying GOLD? Are they completely insane or what? Where can you hide? I don't get it. It might be around the corner, I'm waiting
to see those $100+ days on GOLD.
indeed....the only reason ES futures are down is because everyone is busy selling them and rolling into Nikkei futures, until japan closes and the process rolls to europe then back to the ES
This is what is meant by the great rotation.
its up only becuase of buying to fight inflation. In the end it crashes massively down as everything falls apart. I would wait until it surpasses its all time highs before placing thos bets. Then I would purchase leap puts about 3k down from 20-22k. The game is to try to start inflation but then think you can stop it. In the end its impossible. You blow one bubble then think you can slowly deflate it. In the history of the world that has never happened. The only solution is massive wipeouts/writeoffs/crash/reset.
The other problem Abe has is true demand. You can inflate the crap out of everything all you want but there is only true demand for basic staples. No one is going to pay $20k for a cell phone. They might pay $75 or even $750 or $75000 for a loaf of bread because they have to eat and they are starving.
During inflationary spirals the consumer is always on the tail end and struggling - wages are very slow/stubborn to move at all but eventually have to. Consumers retreat other than basic staples to survive. Consumers are not going to buy most other crap, including TV, cell phones, computers, clothing, cars - all the crap that makes GDP go which makes taxes go. So while you might succeed in certain respects you surely will kill most other industries. You likely kill them to the point they no longer exist in your country.
“‘Devaluing a currency,’ one senior Federal Reserve official once told me, ‘is like peeing in bed. It feels good at first, but pretty soon it becomes a real mess.’”
—Francesco Guerrera, The Wall Street Journal, 4 Feb 2013.
"tits" right on
*looks at charts as a J6P*
That looks neither healthy nor natural.
Kyle Bass's fund must be on the verge of collapsing. He's right on his yen short, but the JGB short has been a true disaster. He may ultimatly be right, but may not be around to get paid.
If I remmber correctly the same thing happened in the US March 2009, and then 10yr rates promptly proceeded to rise from 2.5% to 4%. Not sure Japan can handle a reaction like that, if it were to happen.
The JPY 10 yr will go nominal negative next. They will be the first, but all (US, EU. UK. CN. CA. AUS. etc...) will soon follow.
Oh China is going to love this. In fact it's slap in the face to the biggest creditor of Japan = China.
Why do you think China is provoking PSY to bomb the hell out of the area? They ain't too pleased that Japan is pulling everyone around them down with them. What a situation.
It's war already. I mean Japan just eroded the value of it's bonds, forget the old Japanese, the sad thing is - Japan is doing that, allowing their old too rot. It's appalling. The country is losing it's marbles. China holds over 8 billion in Japanese debt, so they now feel poorer. The game is on, China went mad buying Japan a year or so back. Japan is now firing back with devaluation of the YEN dropping the yields too almost nothing, also killing the value. There is an endgame here.
I really don't understand bonds very well, so please forgive me if this is a dumb question; however, doesn't dropping rates cause the value of existing bonds (such as those already bought by the Chinese) to rise? Or have I somehow gotten the implications of the article completely backwards?
The biggest creditor of Japan is elderly Japanese folk. And I don't think they're in a hurry to spend all their money just yet to buy gold, too patriotic.
Well inside the event horizon, Japan will soon be reporting to us on the amazing dynamics of a monetary black hole.
I’m mostly looking forward to getting a free Toyota Camry with every tank of gas I buy.
34 basis points on 10 year bonds payable in the weakest currency in the world. And Krugman says Central Bank policy has no effect on interest rates. It's so ludicrous and makes everything else he says worthless.
the usa future in spades
Its just sake-dick. Abes gonna power through this. /sarc
Wait what.
Im totally worn out... why is this happening?
Godzilla iz liek it
Iz want MOARS!
If they need to they can get another billion from raiding MtGox.
If you print it - they will come.
Who (and why) would someone buy a bond with essentially zero yield which will be paid back much later in a currency the issuing government has vowed to kill?
Perhaps one reason is I believe that the rates (thanks to Abe) will go even lower and I will be able to sell the bond at a profit to someone else in the ponzi.
japan is a glowing radioactive zombie so what does it really matter? all they have to look forward to is cancer and slow lingering death for generations.....
Yereeehaaaaa.
? 0:25? 0:25
www.youtube.com/watch?v=wcW_Ygs6hm0
Mar 16, 2007 - Uploaded by lawscottie
Major Kong Rides the Bomb. lawscottie·10 videos. SubscribeSubscribed Unsubscribe 48. 597 ...
ES = GC ... who will win?
This is starting to feel like an end game with rooks and pawns left... getting close to who make the first mistake and then it's over.
Using the "rule of 72", if you divide 72 by 0.34, your money should double in about 205 years, right?
Or was that divide by Zero??
Ok, sorry, but can anyone explain this to me in basic terms. Do I have this right? They announce that they are going to print yen like crazy, so people are ditching them and going into bonds and stocks? In the future, people are going to start selling these things after it all gets printed and they will have more deflation again right? Won't they just have to fire up the printers again?
Can't they just mint a $1 Trillion dollar coin like our genius president suggested the USA do?!?
Gold and silver will also crash hard. Less than everything else but still there will be no safety nowheres.
As a monopy supplier of their own currency, they can never go bankrupt!!!