This page has been archived and commenting is disabled.
Japanese Government Bonds Halted Limit Down; Yields Spike To 10 Week High; Worst Day In 5 Years
It appears things are getting a little out of control around the world. Between the collapse in JGB implied volatilities in recent days, today's melt-down in JPY (+255 pips from pre-open US levels), the last few days melt-up in the Nikkei (+6.8% in 3 days), and now the quadrillion Yen Japanese government bond market is halted limit down as yields smash higher by 11bps to 70bps in 10Y - the highest yield since mid-February. For context, this is the worst day in JGBs in five years (and 5Y yields are back near 13 month highs). So much for controlling the domestic bond market while ratcheting up inflation expectations - remember what happens as Japan's cost of debt rises! And just to add some more fun, Japan's economy watchers see the current economic climate dropping for the first time in six months (and household expectations also fell for the first time in six months).
JGB Futures halted limit down...(from 12:39 Tokyo to 12:50) due to rapid price moves... exaggerated soon after the BoJ's buyback efforts on JPY130bn
Yields jump their most in 5 years...
To 10 week highs in 10Y...
and near 13 month highs in 5Y...
2% inflation or bust! or maybe 2% inflation and bust
Japanese Econ Watchers Current Index turns down for first time in six months...
Charts: Bloomberg
»
- 25094 reads
- Printer-friendly version
- Send to friend
- advertisements -
BTFD!
Go Abe!
Go Team America!
http://www.youtube.com/watch?v=UEaKX9YYHiQ
Mmm, mmm, mmm!!
Yummy Japanese bearings getting cheaper by the day!
Burrish!
Why do I think Comrade Ben has a knot in his panties this morning?
Mr. Market pissing on your birthday cake, Benny?
Halted - rutrow
It'll probably be pricing 144-145 again next week.
Nevertheless, that was one hell of a gap-down.
If you were short Thursday night, you retired this morning.
If I recall previous articles, weren't rising bond rates the indication that Japan may have reached the point of not being able to print their way out of this? No matter how much you print, rising interest expense always exceeds it?
This shit is mind-numbing. It's like the weird things that happen when you get too close to a black hole.
Is this what it's like to be a sheeple? Your orbit is stable until it's not. You cross the event horizon long before your Ivy League navigator admits something is wrong with his perfect Newtonian calculations. This is the boundary of inevitable doom, but you do not feel any jolt as you cross it. Only a vague sense of unease. Darkness looms up on all sides and you look at the outside world with tunnel vision. It seems time is accelerating out there. You realize you are being simultaneously stretched and squeezed from all sides. Within minutes you are hamburger. A slightly more bloated monster is the only evidence you ever existed. You have not satiated it- that's impossible. You only made it hungrier...
Nodebt you're right on. The Japan ship has cross the event horizon and we shall witness this one doom in due time. their monetization reduced its debt load in arithmetically, while the interest cost compounds exponentially, multiply by the currency devaluations. The Japanese equities investors might have a surprise for them in store.
If they refocused their buying scheme to purely domestic assets (esp. JGB's), they could very easily reverse this trend a la Fed. The fact that they're not doing this, and instead buying mostly foreign assets, is at least initially pretty confusing.
I do not recall if I wrote that before but just in Case.
SHORT TREASURIES BITCHEZ!
You can spend all your time makin' money
You can spend all your love makin' time
If it all fell to pieces tomorrow..........
Take it to the limit ichiban time.................
Expect PMs to get sold while the Japanese bond bulls raise money for their margin calls.
Yeah - out of control. Equity futures still UP Up Up!!! Maybe they will fall later.
Ummm...equities can try to pretend the Japanese bond market doesn't matter...but...errrrr...there's some pretty obvious and serious math that would suggest otherwise.
does your math include risks calculation ?
They just printed trillions.....it's not like they don't have any money.
In U.S. historical data, it's not till bond yields rise above 5% or so that they become a drag on equities.
Japanese yields have risen to a crushing rate of ... 0.7%.
No reason, in other words, that Japanese stocks and yields can't crank higher together for awhile.
I keep hearing about this math stuff, but the people on TV never tell me what it is.
Can you tell me? Where I can find this math stuff?
http://imgur.com/DLiFBJY
Do not worry. I have it from good sources that the very finest minds in the world are available and working at this very moment on this very problem, and even Tyler is up late (to post early) the news as it breaks.
Go fishing.
Nikkei looks cheap now, until it doesn't. SSSSlide soon!
JGBD fellas
Got my tickets homie 10k worth
Danger Will Robinson, Danger!
UP Forester? I went to Michigan Tech. Heard a program on npr tonight about a wolf season....seems their population is doing quite well.
Wolf population is exploding on Wall street and in DC too!
Dammit....I walk out of the room for like 2 seconds.....and all hell breaks loose.
This crap wouldn't happen if we had gun control, immigration reform, and better suppression of the Benghazi terrorist attacks.
There's a hole in the bucket, dear Liza, dear Liza,
There's a hole in the bucket, dear Liza, a hole.
Then mend it, dear Henry, dear Henry, dear Henry,
Then mend it, dear Henry, dear Henry, mend it...
hujel
There's a hore in the bucket, deal Riza, deal Riza,
There's a hore in the bucket, deal Riza, a hore.
Then mend it, deal Henly, deal Henly, deal Henly,
Then mend it, deal Henly, deal Henly, mend it...
hujer
Fixed it for you!
Ya'll are touched in the head.
God, I love this place.
Get moar buckets......the printers are spitting out paper at a staggering rate.
Oh shit that's funny! Thanks for the morning laugh. hujel
Looks like we know where the house-of-cards wrecking sneeze is going to come from.
Going to be fun watching the Berstank try to catch this knife. hujel
Watch out Mrs. Watanabe! That steamroller is getting mighty close to your kimono!! Remember the first rule of Ponzi finance - the first to run away wins, and the last one to react is the one who gets flattened. It is a slow motion and painful thing to watch / experience in this case.
How you like me now. What's up Bernanke. You knew me when you blew me.
Not really much of a move yet, as the JGB decline is less than one percent (one handle on a 144.60 start), and the yield has only moved up a few angstrom (Japan paper no longer has pips.) The yen is of much more significance, at least right now. With the lack of domestic funding ability (save for the BoJ buying), Japan is not going to be able to entice many more foreigners to "diversify" into Japan paper when the currency is evaporating. The world is 33% more expensive for Japanese than it was six months ago. No wonder they scoffed up any Ferrari or Lambo on the lot.
Also keep an eye on the Aussie. It's not Japan related, but it is furtively sneaking back down to dollar parity. And guess which favorite hedge fund trading, liberal cause-funding Hungarian is short (to go along with his yen short)?
Japan is soon to become the top holder of US debt. They can easily slow down their purchases of Treasuries so they don't create as many Yen. This is ultimately very bad for the US debt markets.
Its funny how the world just pretends that the Fed insn't there on the graph when you pull up the chart of biggest US debt holders.
That long term chart with this move looks kinda sketchy to me. Definitly worth a report.
Anyone saying that Tylers are jumping the gun on this are numb. It may turn out to be nothing but ....who TF knows.
Why is that bad? Benny boy will take any balance for sale? Nothing is bad! Buy the Dip
Japan hasn't been driving the bus for awhile now, and are losing what control they had- they just can't admit they're being gamed.....
Let me get this straight: Japan is up to their eyebrows in debt, over 250% of GDP, AND the debt of the US as well.
They're some kind of debt kamikazes. hujel
George is one smart shark.... He like a shark smells blood
Did he get promoted from being a snake?
Let's see whether it does anything to GOLD this time.
I suspect it's doing a lot of good for gold VALUED IN YEN.
When JGB's become worthless the money backed up by JGBs become worthless. That money is JPY. In a debt-standard money system when the debt backing up the money goes bad, the money as well goes bad. This is the equivalent of money supply deflation. In a money supply deflation scenario denationalized money such as gold, silver and bitcoin are the best money solutions to protect yourself given their limited counter party risk exposures. Knowmadic Life did a great article on the counter party risks of the major money alteratives and how they would be expected to protect you in times of inflation and deflation. A great read!
http://knowmadiclife.com/blog/2013/4/8/knowmadic-life-inflation-deflatio...
There's life Abe but not as we know it, not as we know it, not as we know it
There's life Abe but not as we know it, not as we know it, Japan!
http://www.youtube.com/watch?v=FCARADb9asE
Talking about Japan:
Hospital Official in Fukushima: “Extremely scary data” — Stroke rate spiking in people ages 35 to 64 — 3.4 times higher than beforewww.enenews.com
arclight
May 8, 2013 at 7:11 pm Log in to Reply
the japanese government have known all this all along
heres what its doing to the animals and environment! what happened to all those studies on wildlife? a bit slow arent they? peer reviewed or corporate owned?
http://nuclear-news.net/2013/05/08/fukushima-a-young-girl-died-of-leukemia-and-others-from-heart-attacks/
A terrible silent tragedy is happening in Fukushima! The lone horseman of Itate speaks out!
“I would like to welcome anybody who is concerned to contact me. I request vets and radiation specialists to come and investigate my horses.”
http://nuclear-news.net/2013/05/08/a-terrible-silent-tragedy-is-happening-in-fukushima-the-lone-horseman-of-itate-speaks-out/
http://nuclear-news.net/2013/05/07/fukushima-forests-found-to-be-radioactive/
http://nuclear-news.net/2013/05/07/fukushima-residents-fear-govt-underestimates-radiation-risks/
http://nuclear-news.net/2013/05/07/fukushima-exclusion-zone-a-short-story-about-cows-video/
and while we are on the subject of censorship..
http://nuclear-news.net/2013/05/08/un-report-march-2013-japanese-delegation-to-the-un-spreads-lies-and-deception/
You're the Fukushima of ZH. Fuck off, spammer.
And while I'm at it - fuck GW and fuck BB.
Spammer?
Ain't gonna go away just because you don't want to acknowledge what is happening.
Also, I don't recognize you the right to "fuck off" me, moron.
can not they print enough yen to buy all the bonds ?
SHOGUN!
http://www.safehaven.com/article/29772/the-us-indices-the-reality
Since the financial crash of 2008 the western economies (US, Euro zone and Japan) have been using quantitative easing (QE). QE is not new. It was also used extensively in the 1930's. Japan has been using forms of QE for over a decade. But when one looks at the velocity of money and the money multiplier the money is not getting into the broader economy. But it is getting into the stock markets largely through the large money center banks that are the major beneficiaries of QE. Rising stock market valuations help the money center banks balance sheets. It is believed for the US at least that QE is primarily to help prop up the banking systems in the US, the Euro zone and Japan. The banking system remains saddled with huge amounts of debt that is either toxic or uncollectable.
The falling yen and the rising JGB yield will form a feedback loop in the coming days to evaporate what's left of the Japanese wealth. This is the first realworld example of the Keynesian endgame. There will come a time when the Kuroda would want to intervene in the yen to stop its fall, only to have the JGB rates skyrocket, and BOJ would have to step in to buy JGBs to cap the rates, and that will send the yen tumbling, which begets more selling of JGBs as Japanese insurance co and pension funds realize they're completely and utterly fudgepacked. We're awaiting the unfolding of such negative feedback loop.
I "paged" down and got the crystal clear Essence of your point. :-)
"We're awaiting the unfolding of such negative feedback loop."
you mean positive feedback. negative feedback is desirable, positive feedback is not.
Japanese still hoards the world's largest savings glut, all in these terrible JGB's through institutions. When the trickle turns into an avalanche
these small changes at the margins will flip their psychology all at once. Nippon instituions are the epitome of herds, all go in one directions and they all go together. When these herbivores starts to stampede it will flatten BOJ and the MOF in the process. IMF will not and cannot help out at all, as Japan is one of the major contributor to it When the backer of IMF defaults, IMF defaults as well. I actually believe USD fixed income instruments and anything with a yield will be bid by these scared Japanese money like life jackets, probaby more than gold would. In a disorderly escape out of defaulting currency there really is no telling where the yen will trade, north of 250 to 300 might not even sound outrageous given the magnitutde of the debt load and the false sense of security the Japanese institutions currently have
+1... but why out of one defaulting currency to another?
Hey it is simple: it is the psychology of the appearance of greater safety in US Treasuries. BUT who is going to shovel all those JGB swaps or Yen as the Japan institutions try to unload them for UST? Seems like the Great Bearded One is already hip deep in UST and doesn't have THAT much room for JGBs on top of the pile, not even to save Japan. But goodness sakes the US Treasury could really get a great deal for a PILE of UST issuance in exchange for Jap GOLD!! (The Japanese institutions hand in their JGBs for cash, buy gold, trade it to the Fed for USTs.) The argument is rather along the lines of the corner into which Iran has been painted - everybody wants their Oil but nobody can officially do business with them, so they trade in Gold. In Japan's case (soon) nobody will want JGBs but Gold willl be an acceptable means of trade. Physical of course once trust totally breaks down.
Indians used to stampede Buffalos over cliffs to hunt them. Never underestimate the stupidity of short term thinking.
that is a good assesment but already planned for here in US
it will be the optimum time to begin QeOva
Kyle Bass interview incomming. Calling Kyle Bass!
Definitely bullish.
kyle smyle tyme
maybe they aint as smart as many thought...
they anoy me, all the same with a camera-fuck em.
oh yea, how many yen for bbl of oil? oz of gold? wait til they get desparate - treasuries ahoy...
Even the most stupid Japanese families will soon realize that buying low-yielding bonds in an artificially created inflationary environment will destroy life savings.
Japanese housewives buying stocks and bonds and Chinese 'aunts' buying gold....... I wonder who's going to end up in better shape?
Well... It works, until it doesnt eh?
long bikes with huge baskets for yen to get a loaf...
works til it don't - sooooooooooooooon
hey stanke, ya watching?
Dow futures green.....return to your seats....
It's Friday and I am totally shocked that futures are green...
Kito I am really starting to wonder about these gold articles. I will elaborate more later. That being said that toe in the water yen short trade is working out alright.
You mean the articles that state they know someone who knows someone who sells gold and and that this someone says there is no more gold.....and that they next 26 point drop will be the death of comex???????
JGB are good story, but WTF about Fukashima? Can't find anything anywhere about it. Must be because they fixed it right? sarc/
No mention of this on CNBC...imagine my shock. (insert Home Alone poster here)
Almost 1% on the 10y.
The horror. The horror. [/apocalypse later]
Still at 1% interest, around 2/3rds of Total Japanese Tax Revenue goes toward interest on the national debt. 2% is a nightmare for government finances, and yet Kuroda has promised to double the money supply. [apocalypse sooner]
Quick, someone blow up a nuclear plant before anyone notices.
Naah, stop worrying, tonight is the semi-finals of American Idol.
Or at least release a poor quality anti-islamic video on Youtube.
this is extremely bearish for gold based on ZH previous posts relating JGB ATM Vol to spot gold. retest 1300's?
Anybody care to explain why they don't have negative nominal rates on their 3-month treasury bill?
The JGB market is trully incredible right now. You have two completely polar opposites in play here. On the one hand, you have the central bank buying without reserve for quadrillions of yen. However, on the other, you have the holders of JGBs who see the 0 rates on bonds and central bank promise to slam the currency as the absolute limit for the foreign price of JGBs. In essence, the central bank is in the process of completely taking over the entire JGB market.
"In essence, the central bank is in the process of completely taking over the entire JGB market."
But so what if no one will call their bluff?
their own currency will call their bluff.
The problem is that yen has to go somewhere (aka out of Japan or into real assets). If you think the yen at a 100 is bad, just wait until it really gets going.
AJ you're right on. When the tree fall the monkey scatters. The ones that don't yells bansai and get crushed. 100 is an important psychological
Rubicon for the Japanese public. They never thought it could be at 100 let along keep going. This trickle will turn into a wholesale exit when they finally realize they've been duped by their trusted govment
The Japanese will buy ..because its in the best interest for their country...and they will do whatever for their country...they will fall on the sword for it...its a different mindset...and their families think the same way...Japan comes first...always...they will buy till they die in other words..I think that is what sets Japan apart from us....
Japan should take devaluation lessons from the world-class pros, Argentina.
After knocking 13 zeroes off its currency in the 20th century, Argentina has shed another zero this century, as the peso went from one-to-one (vs. USD) in 2001 to ten-to-one today:
http://www.ambito.com/economia/mercados/monedas/dolar/
Dollars to dimes, as it were. WINNING!
So if the govt is buying bonds and the Japan government and institutions are the primary owners, than who exactly is selling JGB?
MybrokersKeeper: Thisi s rhetorical right?
Only if Hugh Hendry would appear on NHK and say "I recommend you panic", then its on
"maybe 2% inflation and bust"
Most likely.
This article is totally overplayed ZH style but of course the underlying fundamentals are totally correct. There are so many good comments from well informed people it's hard to reply to all. Japan is Argentina waiting to happen, later this decade, maybe sooner.