This page has been archived and commenting is disabled.
Meanwhile In Japan... "The BoJ Is Swallowing Everything"
The Bank of Japan's governor Kuroda proudly told the world "long-term yields are bound to rise at some point, but we can curb it when it happens," and on a grand scale - that is what they have done (for now). But market participants are growing increasingly concerned. As we have warned numerous times, the suppression of 'normal' volatility in teh short-term can only lead to larger uncontrollable moves in the future. As The FT reports, some worry, too, that the BoJ has pushed up JGB prices to the point where interest rates no longer bear any relation to the government’s creditworthiness - "effectively we have removed the light from the lighthouse." Some say the transition has been unsettling as many analysts talk more openly of the risks inherent in what the BoJ is trying to pull off. For one thing, liquidity has evaporated... "volatility looks low now, but if some investors start selling, the impact on the market could be much bigger than expected. That is a big risk."
As if to support this view that the Japanese are hiding reality, the US Treasury had some thoughts:
- *U.S. SAYS IT WILL CLOSELY MONITOR JAPAN FOR DOMESTIC DEMAND
Realized vol has collapsed in JGB rates (but forward implied volas for Japan swaptions is surging again)...
There are few bigger bond bulls than Haruhiko Kuroda.
The governor of the Bank of Japan told a New York forum this month that flat or falling yields in Japan’s Y936tn ($10tn) government bond market “can, and should continue” – even as inflation keeps edging towards the central bank’s target of 2 per cent.
...
since the end of June, yields have settled into a gentle downward groove, meaning that JGBs have beaten all other markets bar some peripheral Europeans. Bond yields move inversely to prices.
Indeed, on Wednesday the benchmark 10-year yield dropped below 0.6 per cent, to its lowest since early May, stretching away from Switzerland as the lowest in the world, as investors anticipated another firm commitment to easing at the BoJ’s policy meeting on Thursday.
This is what the governor ordered.
...
But some say the transition has been unsettling. Analysts are beginning to talk more openly of the risks inherent in what Mr Kuroda is trying to pull off.
For one thing, liquidity has evaporated. Banks that used to be busy making markets for private-sector institutions say they have been marginalised
...
“If a client asks us to bid it’s easy, as the market is very, very stable,” says one dealer who asked not to be named. “But if a client comes with an offer, it is a problem, as the duration to cover a short position is much longer and no one is offering. The BoJ is swallowing everything.”
...
In the first week of October, for example, the yield on the benchmark 10-year bond moved by just 0.001 per cent, or one-tenth of one basis point, on three consecutive days.
...
“Volatility looks low now, but if some investors start selling, the impact on the market could be much bigger than expected. That is a big risk.”
Some worry, too, that the BoJ has pushed up JGB prices to the point where interest rates no longer bear any relation to the government’s creditworthiness.
...
Under its previous governor, Masaaki Shirakawa, the BoJ was always sensitive to the charge that it was indulging a profligate government. Under Mr Kuroda, the bank still argues that because the purchases are not made directly from the finance ministry, they do not fall foul of a 1947 law that banned central bank underwriting.
But it is an increasingly fine distinction, say analysts.
...
“Effectively we have removed the light from the lighthouse.”
...
But the bond market seems to be storing up tensions anyway, says Yasunari Ueno, chief market economist at Mizuho Securities.
Investors “should remember”, he says, “that the currently irrational movement will probably translate into a growing momentum for a large price move in the future”.
Or as Taleb wrote: "There is no freedom without noise - and no stability without volatility."
And always a great read on the real dangers of suppressing natural volatility:
»
- 10713 reads
- Printer-friendly version
- Send to friend
- advertisements -
When the burp comes, you don't want to be anywhere nearby.
we have entered into an arrangement with BOJ whereby they will act as a subcontractor to print $USD and will price their debt in $USD.
we see this as the new standard, going forward, to help relieve some of the stresses on the petrodollar
the increased number of foreign-printed and foreign-held dollars, purchasing goods and services from the US, will stimulate the US economy significantly and will lead to recovery and prosperity
hugs,
jellin
http://www.youtube.com/watch?v=YgU0YytQVbs&desktop_uri=%2Fwatch%3Fv%3DYg...
Art imitates life.
Classic hip hop from NWA: She Swallowed It http://www.youtube.com/watch?v=sw2Yeeybjn8
Japan: Biggest Keynesian fiat dick sucker in the world (until the US implodes). Swallow it all baby, don't spit.
Lesson 2 : Gently place the balls into the mouth and ..
HAMMMMMMMMMMMMMMMMM..
get it all baby ..
get it all baby ..
get it all baby ..
"what you want me to do with it?"
don't matter just don't bite it
she swallowed it ..
suck this dick for daddy
she swallowed it ..
usin' that lips
she swallowed it ..
it's the world's biggest dick
"what do you want me to do with it?"
don't matter just don't bite it
Slow is the tempo
Now talkin' but an info
So peep it up here goes the info
This is the bitches and the ho's crew
She get it as much we make bets on who's the ho's we'd love to go through
And for the shit that she does give her a drum role
Because the dumb bitch licks out the asshole
And a list of videotaper
And if you got a gang of niggaz, the bitch would let you rape her
She likes suckin' on dicks, and lickin' up nutz
And she'll even take de broomstick at the butt
Just to say that she did it with a rapper
But the pussy was more fishy than red snapper
"But how many licks would it take" She ax's
"To make MC Ren start gooshin' up vanilla shake"
She took her tongue out her mouth, put it on top
Like a cherry, started movin' it like a snake and it was very Irresistable
I could'nt pay the bitch to quit
'cause the ho' was doin' some ole' crazy shit
That made me start havin' a fit'
'cause the bitch sucks de hellified dick .. [suck this dick]
"It's the world's biggest dick"
Don't matter just don't bite it
"It's the world's biggest dick"
Don't matter just don't bite it
"What do you want me to do with it?"
Don't matter just don't bite it
She swallowed it .. Get it all baby!
Now one night night I was at a drive-in
And a car full of niggaz straight drove in
I thought they wuz commin' to start trouble but no
Five niggaz in the back it was de neighborhood ho'
Now what do you expect they're gonna dogg her like a doggy
Thirty minutes later and the windowz all were foggy
And I'm off in my car havin' a fit' 'cause de bitch that I'm with
Sayz no fuckin' on the 1st date shit
Now I'm like - Damn! I wish I was in the bucket
To be with 6 niggaz with the ho' and I can fuck it
etc.....etc....etc......
There is no double-blind trading transaction or hedge anymore, or ever again. Once enough marks are pulled into positioning and once opposing that position is deemed more profitable that status quo, DISLOCATION. Central banks have looked the other way while HFT and retail trade's moves are viewable; this has demolished the vestige of free markets. Fiat allows for unlimited trading lines to exploit ignorant investors. Sovereign bonds, stock markets, indexes and every complex instrument derived from those foundations are merely play pieces for drawing in capital to be slaughtered. Obvious once fundamentals were long ago abandoned.
Remind yourself daily this cogency. "Once having committed to fiat creation outside any market scrutiny, no checks or balances remain; and so, what restrains these bankers from printing infinity?" Nothing. Except perhaps to extenuate the game. Anyone placing temporary tokens of wealth to the disposal of Caesar's systems only deserve the slaughter intended. That comes not immediately is merely that it's sum is yet insufficient for such an open act, or that other dumb investors, likely to pledge, not be dissuaded. Once enough rank-and-file have entered the racket, they light the torch. How can anyone view the global market charts of the past two decades and not realize it?
Capital markets should forevermore be avoided. There is no gain, but paper gain, and then again only PAIN.
"There is no light in the lighthouse"? No, there is no brain connected to the brain stem. No value in a value chain.
Spooky hallowe'en voces, "There is no life in this body."
I think it will vomit, when the burp comes
Bullish!
Off topic. I'm confused and A bit let down that I still haven't read one juicy conspiracy theory on ZH about the mystery Google barges in California and Maine.
thems FEMA Cruises (everyone is in steerage class) now start shoveling coal mother fucker cause we gotta make 20 knot for the captain to ski.
No conspiracy: Google is so big, they made the Coast Guard sign a non-disclosure agreement. How cool is that?
Love the handle!
Goons of the oligarchs are arising everywhere. Take Detroit, for instance:
http://www.commondreams.org/view/2013/10/30-6
http://www.blackagendareport.com/content/detroit-bantustan-wall-street%E...
From the black man who stepped outside the red-blue "lesser of two evils" charade and prophetically termed Barry O as "The more effective evil" from even a genuine liberal perspective.
Thanks for those links. Some of the comments on the second one make me hopeful.
I hear that!
Let's also throw this on the pile of central bank manure. Top Chinese Banks Post Biggest Bad-Loan Surge Since 2010 - Bloomberg
No worries, they can just print their way out of it. /s
Shhh, now don't say anything bad about our masters, gay folk, colored folk, SNAP card carrying white trash or womenz, the IRS,TSA, Obakalaka Care, don't raise your voice in public meetings, say Islamo "terrist" Illegal Alien, or spit on a DC sidewalk or bump into a BarryCade................
Guess what my fortune cookie said tonight?
"Listen to friends with an ear to the future".
Can you dig that? WOW. More Kyle please.
Over.
Capitalism is DEAD... Invisible hand has been broken and is being twisted behind our backs! It isn't nice to fool with the market....it ALWAYS gets you back.
venturen:
Not dead------MUTATING!
changing form
"Invisible hand has been broken and is being twisted behind our backs! "
And stuffed up your arse.....
Tell the whole story......
Commies!
2% inflation target. hahahaha
It's a war trade, nationalize the bond markets (eventually surpassing the 90% already owned) then issue war bonds to the populous. Everything will be poured into Japan's war-machine. The Keynes insane in the membrane rule book.
War is bullish. War between China and Japan is just the thing to get the world economy moving.
Run for you lives! It's BelchZilla!
the truth being that the excessive increase of anything often causes a reaction in the opposite direction; and this is the case not only in the seasons and in vegetable and animal life, but above all in forms of government. Plato
Swallowing makes it less messy....until it isn't. -Rod Stewart
Japan is a test case for the US. I hope they can figure out how to avoid collapse. Then the US can use it as a road map, only on a much larger scale.
Thanks for the laugh.
Japan is the Fed's grand Keynesian experiment.
the japanese have clearly left their mighty toyota-building salad days, and for some inexplicable reason have chosen to return to their cheap, transitor radio days.
Ya know, I was thinkin'-- oh, wait!! USD/JPY up! bbl...
Japan buys US debt with printed Yen and the Fed buys Japanese debt with printed dollars. What a game.
Webster's is going to have to update their definition of capitalism soon.
The only competition in today's markets is between counterfeiters.
if you think the japanese are going to suck usa dick forever you are mistaken. japan will play this game until china ups the ante to bring japan into its fold. in the meantime japan will print(so will the eu) to cover for the usa printing as long as it doesn't harm japan. when it begins to harm japan and japan has assurances from china for protection japan will jump off the ponzi train and print the quadrillion yen coin because the first country to prin tthe coin will be the winner.
Re BOJ Swallows Everything
Seems like the "O" in BOJ might be superfluous.
Interest rates are a price transmission mechanism, like the nerves in your hand. Ben has destroyed that mechanism, the same as you cutting the nerves in your hand. Now you will feel no pain, even if you put your hand in a flame. Thanks Ben.
FWIW, this point, equivalent to saying the lighthouse has no light anymore, has been made here at ZH for three + years.
For a look at the way in which JGB trading volume has slumped, which in turn signals investor apathy, please see this:
http://nipponmarketblog.wordpress.com/2013/11/06/the-japanese-bond-marke...