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Bank of Japan Policy Meeting Preview - Chance Of A Bond Crash?
Excerpted via Bill Blain of Mint Partners,
The current Bank of Japan policy meeting is possibly the most important thing going on this week (even more so than Bernanke's comments perhaps). If, as is distinctly possible, they don’t do anything to reinforce the immediacy of the Kuroda QQE package, we could be looking at bond markets reacting in a most "unfavorable manner". The effect would be to reinforce the latest round of 'fear-on' bond selling – certainly over the short-term, and the damaged sentiment could impact stocks also.
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That's why the Bank of Japan policy meeting today/tomorrow will be so interesting. Can it nurture and sustain real growth? Devaluing yen to benefit exporters does seem to be working - look at recent Yen corporate results. However, now we've got the rest of Asia looking to balance Japan's competitive devaluation. We still need to see how the other side of Abe-onomics works: rebuilding Japan. How vulnerable is the BoJ game? The Nikkei may be massively higher, but interest rates and JGB's remain stubbornly volatile and high - a factor conflating the global bond worries... if the Fed is going to end QE and Japan's QE squared isn't working, then bond players will quite rightly capitulate.
There is probably not much the BoJ can say at this meeting – it’s got to give the policy (of massive QE) time to work. That leaves markets highly vulnerable to a sense of disappointment tomorrow. On the other hand, we've long said.. "Don't fight Kuroda!"
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Whatever happens in the Japan story; how much longer the Fed keeps up the buying, and the implications on Global QE remain the main themes and drivers of the current market. The question is, for how long might markets be put on the back foot by the continued weakness in JGB and knock on effects. [let alone Europe]
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Back in the bond market, over the last few days the search for yield does seem capped. There have been some stumbles in new issues, and we're encountering reluctance from buyers to engage some excellent client offers for the highest yielding names like Greece or Slovenia. We've seen limited interest in relative spread trades - for instance privately placed Canada risk at a significant spread over the underlying provincial names. That all tells me the bond market is nervous.
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turning japanese.. i really think so
http://www.youtube.com/watch?v=gEmJ-VWPDM4
I came.
he almost died
Berkeley Man Nearly Beaten to Death by CHP for asking to read the ticket he was givenhttp://www.nbcbayarea.com/investigations/Berkeley-Man-Near-Death-at-the-...
the ironic thing is he is a Russian immigrant - therefore he should have understood the risks
Bond crash? Non-sense, keep printing and keep fixing the bond price until the shorts dies from margin call. Infinite balance sheet comes with great powers and responsibilities.
A lot of people are looking at Japan's follies in amusement and even joke about it, but
if the 3rd largest economy in the world crashes and burns, which they appear to be well
on their way toward, the fallout will affect every nation (kind of like Fukishima or however it's spelled)
One thing is certain: There will be no talk of tapering, and that's great for equities, right??
Well - at least it will be great for equities once (hyper)inflation takes hold.
Japan's monetary policy is analogous to a very fast car with the accelerator all the way down, but if you look inside the car you'll discover that there is no steering wheel. The economy (or indeed the currency) can not be micro-managed by the authorities - fiscal or monetary. All they can do is apply more or less pressure to the accelerator, and then really hope there is no bend in the road ahead, and that it all turns out ok in the end.
http://nipponmarketblog.wordpress.com/
If bonds crash will stocks follow?
HELL NO! THE BANK OF JAPAN CAN BUY ETF EQUITY INDEXES.....
I would like to help Japan end the deflation by selling them my used clunkers for a billion yen per car. "Yen for Clunkers" it is called.
At least the clunkers is worth something at the scrapyard.
Almost certainly. Although the timing is uncertain.
The bond market will only crash if there is a capitulation and a complete loss of faith in the Abenomics plan, and if that happens then of course all bets are off - including in the equity market. But of course, if a bond market crash and government default happens then the Yen will do a proper Baumgartner, so eventually equities will sky-rocket in nominal Yen terms. In real terms however (or in USD terms), it probably won't be so pretty...
http://nipponmarketblog.wordpress.com/
Freakin scary.
It sure seems as though everyone will go down just about the same time.
I'm wondring just how the fuck it has come to this, Japanese products are some of the best in the world, strong export society, (not to mention that Japanese women are sexy) an incedibly disciplined lot, the Japanese, and yet they just can't seem to pull it together. from post WW-2 to this...
Centrally planned prosperity has its limits; it lacks the flexibility thats required to survive the inevitable bad times.
Japanese bonds are safe assets and with the BOJ there to help buy over-supply, should continue to be a safe-heaven. At least Japanese bonds give you some yield unlike gold.
"At least Japanese bonds give you some yield unlike gold. " ???? What Yield you are talking about, Dick? YEN lost 25% of it's value while bonds yielding 0.5%? Yeah, at least Great DOW stocks will give you 2-3% Yield and it's no problem that you could lose 50% of your principals in no time, who cares? Yield is better than in Bonds, everything else don't matter For CNBC pundits and you, obviously.. GOLD has no yield, no Debt, no politicians, and 1 oz cannot become 1/2 oz and that's guarantee. P.S. FED: "Investors reaching for Yiled". Give'm 3% and cut their principal in half. to make them happy.
I agree with "cougar woman" on this...there is a danger that the yen falls to 1000 to the dollar here. this is not some "abstract thing" going on over there either. the world has simply not addressed...nor does appeared bothered by...the catastrophe of Fukushima. does lighting up those reactors start a whole 'nother meltdown? there is something called the IAEA...where the phuck are they on this?
This is simply riveting stuff...
...how do the Japanese Press stay awake at Bank of Japan announcemtns after 20 years of the same...
Plan A. QE1 ...failed
Plan A. QE2... failed
Plan A. QE3 ...failed
Plan A. QE4... failed
Plan A. QE5 ...failed
Plan A. QE6... failed
Plan A. QE7 ...failed
Plan A. QE8... failed
Plan A. QE9 ...failed
Has none of the Jap Press sought to ask the question is there a Plan B ?
...or when Bank of Japan's Plan A, Parts 1 to 9, are targettd to succeed??
...Japaa's financial media are about as brain dead as the Fed's cherry-picked cretins for their FOMC Press conferences... it's a brave man that asks a central bwanker a pointed question, like "Do you actually have the remotest clue what you're doing Mr Chariman?"
Just much more of what hasn't worked. Just delays the adjustments.
No Chance of a phailure. The Bernank has Abe's back.
As long as you're happy with 0.5% return, its a good investment. LOL.
The U.S. Fed balance sheet never has to be sold. It is nonsense to speak of anything as such, albeit many people that have no idea about how the Fed operates will postulate theories. The truth: All governments that have been buying bonds over the last 30 years have done just fine, thank you. China and Japan have made a fortune owning U.S. debt. The U.S. has made a fortune buying and holding U.S. debt. Marked to the market, there are no losses. Not true about stocks like MSFT, INTC, T, GE, JPM, etc. The NASDAQ is still down 30% from 2000. If held to maturity the yields of U.S. debt are substantially higher than most equity investments over time. : )
Restart nuclear power plants + print moar! Winning!
Abe’s Resurgent Japan Hurt by Lack of Business Spending
21 May 2013, by Toru Fujioka (Bloomberg)
http://www.bloomberg.com/news/2013-05-20/abe-s-resurgent-japan-hurt-by-lack-of-business-spending.html
Japan Bondzilla countermeasures via Johnny Sokko.
/sarc
Curse that Johnny Socko and his flying robot, my mortal enemies.
You know most people don't make that connection and don't even understand your name. I'm torn between lord save us and lord destroy us.