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RBS Abandons Japanese Bond Trading, Cuts 200 Jobs; Stocks, USDJPY, JGB Yields Are Re-Plunging
The Nikkei 225 has fallen over 300 points from the v-shaped recovery close at the end of the US day session and is now trading below the lows of the day at 2-week lows. USDJPY has plunged over 100 pips having briefly neared 120.00, now back below 119.00. JGB Futures are trading near record highs prices as yields collapse to near-record lows (30Y -23bps since QQE, 20Y -15bps) only seen during last year's yield-crash. No surprise then with the bond market "dead" according to market participants and yields negligible, that RBS has decided to exit the Japanese fixed-income business, slashing 200 jobs, and surrendering its primary bond dealership.
Japanese consumer confidence missed once again, tumbling to 7 month lows (near 3 year lows) and business confidence missed expectations.
Japanese stocks have given up all the US day session v-shaped recovery gains and USDJPY is back under 119...
Yields are in freefall...
And entirely illiquid, which has led to this:
- *RBS SAID TO EXIT JAPAN FIXED-INCOME TRADING AS IT CUTS 200 JOBS
- *RBS SAID TO CUT MOST OF JAPAN JOBS BY FEBRUARY
- *RBS SAID TO PLAN TO SURRENDER PRIMARY BOND DEALERSHIP IN JAPAN
As Bloomberg reports,
Royal Bank of Scotland Group Plc will pull out of fixed-income trading in Japan and slash staff numbers by more than 200 to about 30, with most of the jobs going by February, according to a person familiar with the plan.
RBS Securities Japan Ltd. would surrender its primary dealership in the country’s government bond market and retain only enough people to service clients, said two people familiar with the proposal, who didn’t want to be named because the details aren’t public.
RBS’s loss in the 12 months to March widened by 78 percent to 5.7 billion yen, the filings show.
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Of course this should come as no surprise given the BoJ's dominance and our recent discussions of the JGB market being - for all intents and purpose - "dead"...
BNP Warns Japanese Bonds Have Lost Their Ability To Price Risk
Mizuho Warns "To All Intents And Purposes, There Is No Japanese Bond Market Anymore"
WTF Moment Of The Week: No One Bought Japanese Bonds For 36 Hours This Week
Japanese Bond Futures Volume Collapses To Zero Even As Service Sector Implodes
"Liquidity Is Becoming A Serious Issue" As Japan's Bond Market Death Goes Global
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What an epic farce the largest bond market in the world has become...
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I think RBS wants out...maybe they think the first rat out gets the cheese.....they for sure know what the last rats out are gonna get
Be nice to see some sheer panic again wouldn't it?
My martini needs more muppet tears.
Great... I just moved all my money out of Greek bonds into Japanese bonds.
Why didn't you guys warn me? I'm not going to renew my $5K secret insider ZH membership again if you can't even tip me off properly on bonds. I mean, how hard can that be?
Anyone else wake up early to watch the Nikki.
EL oh el
Ok Mrs. Yellen, crush this fucking market, ang then I like the tune of 120 Billion to perhaps 150 Billion per month. I think that could definitely get us escape velocity.
Government should deficit spend as well. We need someone to bomb. Perhaps we can FF ourselves in the Black Sea and blame the Ruskies? That'll be worth another 4k on the DOW.
Haus, tell us more
OT, meanwhile, here imo an interesting article from The Guardian: "Why the world is a real-life game of global domination"
a little gem from there:
"Many see this as the outbreak of a classic currency war, along 1930s lines, where rival economic giants engage in a pointless game of devaluing their own currency – boosting exports but hitting the spending power of their people – to their mutual detriment. By hitting each other’s capacity to export, they edge the region towards deglobalisation." Note here the last, novel-in-this-century word (I was waiting for that, as much as I was waiting for "FX Reserves dwindling" to come back)
and something I'm still mulling about:
"In 2014 Russia’s perception of its “game” with both Europe and America has became purely combative. Reluctantly, these other two players recalibrated their stance, while trying to maintain the global rules as collaborative. But in the last quarter of the year, the game has also changed between China and Japan."
Interesting how in the 1930's the currency war was DE-globalizinng, Wouldn't be surprised if it still works that way. Ultimately.
the two things are... interwined. fact is that a globalized economy needs a "common denominator". As I always repeat, price calculation is what makes the real economy "tick"
If I shift part of my production from the eurozone to Thailand, for example, I have to calculate in... dollars, currently. or hedge, accordingly
or grow to the size where I can afford to have a giant accounting department calculating everything in six different currency ledgers, with a big treasury department having a common firm "FX strategy", at which point it starts to make sense to quote my stocks in various locations. the "megacorp" way
currency wars are... tricky. those who look like losers are often plagued by internal strife which is often fuelled by nationalistic pressures, most notably when the own currency becomes an object of national pride
See for example how in Russia MPs on Putin's side harangue the Russian National Bank as a "bunch of traitors" for "letting the Rouble fall", while disregarding that Putin appointed that bunch
but in the short-term, a currency devaluation will be celebrated as a victory in the "beggar your neighbour" tactics by others of the "Krugman persuasion"
keep that in mind: a globalized economy needs a globalized currency system. any system. it does not matter if it's sound, or good. it just has to be "something resembling a system"
And that common denominator is value, and the method from whence it it determined. Up until 1971, it was gold. Since then, it has been capriciously determined by the central banks. In the past, the differences were equalized by interest rates. In the era of world-wide ZIRP, good luck with that. The system is coming apart at the seams. Unless you have practical experience with chaos theory in real-time, play again. Sorry.
value is... overrated. the economy demands currency, not value. value is what it produces. value is what is demanded. but producers themselves demand a denominator in order to produce value. it's only after they produced value - thanks to a denominator, which, depending from it's quality allows a proper price calculation - that they start to mull about how to conserve value
yes, it used to be gold. that was the common denominator of the first great globalization era led by Britain. but if you say... "capriciously determinated by the central banks"... well, you are describing that age, too, and gold in it. the value of gold was given by the pegs of the gold-backed currencies
in short, you can't call what existed then anything resembling a free, unhindered market of gold-as-money. you have to go back in time for that. and there is a proof for that: gold was super-stable in price... because all relevant currencies were pegged to it. It's a case of dog versus tail
in the past, differences were not only equalized by interest rates. the sheer size of a gold hoard was a "military preparedness indicator", too, and used in that part of the game. what broke that system was how fast nearly everybody unpegged from gold in the first weeks of WW1
You are you mulling about combative vs collaborative ? It represents the two big schools in international relations, realism versus liberalism.
America will have to chose between these two approaches as well. Being combative in a last attempt to maintain global dominance, with the likely result that EVERYBODY will be worse of, or become/remain collaborative, with the result that everybody can gain in absolute terms, but America very possibly loses in relative terms.
So we Europeans can invite as many rich and powerful Americans as possible to relocate to Europe to increase the chances of the second scenario. Further we should adopt English as the official language of the EU ( console yourself Ghordius, it is only a metaculture ). And we can form a partnership among equals between the EU and USA, possibly ( yes House, the horror ) with a shared North Atlantic currency. London, the flower of cities all, becomes the centre.
Or is this too much for a wednesday morning ?
piratepiet, definitely too much for a wednesday morning! LOL
I never liked - or had patience with - this debate between the two schools. I tend to be a realist, there, and to wish I was a... what would the word then be? liberalist? or just "liberal"?
I see some Greek hubris hovering over your "Decline of America" scenario. And I note a campaign going on to convince enough of your - "clients"? - to avoid Europe. In fact, are we in the EU really welcoming towards them? I'd say London is, yes, and then period
In a way we already have English as the inofficial lingua franca. I don't remember the exact numbers, but somewhere about half of non-English speaking Europe does speak English as a second language
but a language does not make a culture or even a meta-culture. Just note how often I struggle with some of our American cousins, here. On simple matters like vocabulary. And this has very little to do with lack of knowledge, and more about the cultural use of the language
partnership among equals between the EU and USA? besides the horror, how? our darling cousins lack the concept of peerhood. and for all purposes, the two-legged USD & EUR pair already act - at the moment - like one currency in certain terms. Remember how the FED and the ECB swapped a cool trillion dollars to help the "dollar dearth" of the megabanks. Joining the two currencies would not only be politically impossible, it would decrease certain options
London wanting to be the navel of the Earth again is part of the problems we have, together with NYC wanting to be the same. both are too heavy at the top
"I see some Greek hubris hovering over your "Decline of America" scenario." It is not a scenario, it is a reality.
"but a language does not make a culture or even a meta-culture" Agreed, but it is an essential element to build a meta-culture.
You write that the Americans lack a concept of peerhood. What exactly do you mean by that ?
"London wanting to be the navel of the Earth again is part of the problems we have, together with NYC wanting to be the same. both are too heavy at the top" The flower of cities all is a reference to a poem ( http://www.bartleby.com/101/19.html ). I do not mean it is the most beautiful city. Paris is indeed more beautiful than London. NYC...have to think over how to deal with that :-)
And last but not least : what is your proposal ? Muddling through ?
piratepiet, is it a reality that the US is going to steer a course that is less combatitive and more collaborative? it's in the future, one that I currently doubt
do we need a meta-culture? beyond the basics of collaboration? look again at our cousins over the pond. do you want this kind of culture wars they are having, still defining what "American" should be? I, for my part, don't want to even start to define what "European" means, and for sure don't want to have a discussion on what an "European" should be
if you note my discussions with House, it usually centers on him demanding exactly that. because it is a culture war reality, in the US. luckily for us our national identities are old
that Americans (and in part Brits) lack the concept of peerhood is something I often write about, here. it has to do with hierarchical thinking, and dominance. it ties with combatitive versus collaborative. Just look at how comments are written about Brussels, or the EU. Note a continuos search for leaders, and leadership. "Who are your leaders?", "Who leads you?", "Is Merkel the leader of the EU?"
that our european national parliaments are the "bosses" literally zips over the heads, as much as the political multi-party arrangements we have. a case of too much "collaborative" in a meta-culture that still celebrates winners for the sake of celebrating winners, whatever they did win. and leaders
London as center of a Transatlantic arrangement hinges on the US and Europe being at the center of things. But the center of gravity seems to be shifting to the Pacific. further, London is still trying to be several things at once, even when completely discordant
"muddling through" is a wonderfully British concept. There can't be one proposal. Imo it's all about options and eventualities and scenarios
those who know exactly how the future will shape... are usually lying, either to themselves or to you or both
You don' t want to define what European means ? Then how, on the basis of what, will you decide European policy ? I think it is unavoidable. Maybe you are afraid to open old wounds. These identity issues are a bit mysterious. I guess the formation of a strong European identity would take a long time and has, in part, to grow spontaneously. Not something elites can force on people. So I think you can define what it means so far, not so much what it should mean. ( Are you playing devil's advocate here ? )
"But the center of gravity seems to be shifting to the Pacific" If that were the case, what I do not believe, you provided us with another argument for a Transatlantic arrangement.
on the basis of compromise. it's a trade alliance. it's about trade. you don't even need a common language in order to trade. or have a compromise on trade policies
if you are a national of a member state, you are part of the club. that simple. no need to cheer or boo a dragqueen like Conchita Wurst in the manners of an imported cultural war
meanwhile, TTIP is rotten to the core. I literally hate it, and I try to be dispassionate about such things. Merkel, at the CDU party summit lately, underlined her argument: "this is the chance of shaping the world's standards, and we have to grab this opportunity". NO, WE DON'T. I prefer regional, higher standards then whatever comes out when certain US Big Biz lobbyists have anything to say
if anything will keep us well afloat, it's quality and the SMEs. and TTIP is a full-blast Big-Biz plaything. the can opener that tries to destroy more you can imagine
"our darling cousins lack the concept of peerhood"
Yes. We will eventually pay dearly for that.
When everyone is expecting it, can it be counted as panic?
And yet US futures move higher, same old BS, different day
CNBC exclusive: Barbie doll pricing RACISM!!!
http://tinyurl.com/mekvvoo
RBS the bank that rallied after admitting it had very low Teir 1 capital of only 5.8%
A country with Bazillions in debt does not need a bond market... Barrack O Blowjob
alas the good ol days of 08-09........long gone......but not forgotten...best tradin of vol EVA!!! when this pig of a market goes its gonna make 08-09 look like a picnic.....
Of course there is no Japanese bond market, the only buyer is the BOJ.
U.S.A. not far behind.
Yep, once usd/jpy slips through the 20 day average here, It will probably be a quick trip down to the 50 day average area, then wait and see. The 38.2% fibi is 115.50 area on the 105.28- 121.85 move.
Yen, I was early trying to catch the falling knife and got stopped out.
Kicking myself for missing the entry.
Being early is the same as being wrong.
Watching for another entry.
Aaaaand it's gone!
There were non-BoJ customers of JGBs? Who knew...
...... perhaps TPTB will give us a lesson in herding cats..........
soooo... new highs in the S&P by this evening then?
a typical day on ZH : waking up with burning japan going to sleep with all time highs
#newnormal
RBS is BANKRUPT and therefore should not have an opinion. Fred the Shred put the final nail in the coffin several years ago, expanding through acquisition, paying top £££££ just before the meltdown. You can bet Fred GoodForNothing spent a lot of his handshake supporting the Independence NO vote as with a YES vote the dirty little fucker would have skipped town before being hung.
You can also bet that other cunt, preacher's son Gordon BrownNose who flogged the family silver, er gold, for a song and was the face of Bankster DickSuck in the aforementioned NO vote was shitting his pants also.
Two of a kind who along with Mr Cheese Blair did more damage to the UK than Adolf Hitler.
At least Adolf did the honorable thing and killed himself whilst these 3 cunts are still spewing shit at banker buffets paid for by the british and american tax payer bailouts.
Think i got my allowed quota of profanities in but think i'll just throw in another Bastard for good measure.
And most Labour voting morons have no clue about the damage done to the UK by that greasy little Fabianist shitstain, yet will quite happily moan on for hours about the damage done by Thatcher. If ever there was a candidate for justice by steamroller...
Justice by steamroller. You are a sick fucker. I love it.
BNP Warns Japanese Bonds Have Lost Their Ability To Price Risk
I'm no economic genius, but I already had that one figured out all by myself, even before yesteryear. What is more, Japanese bonds are clearly intended as a pars pro toto here: is there any financial instrument left that adequately prices risk in an environment that seems to come straight from the imagination of Charles Lutwidge Dodgson and J.K. Rowling combined?
Why do you think ever more people seem to be falling victim to boating accidents these days?
That's ok RBS, I'm sure the British taxpayer won't mind covering you for your hilarious incompetence. Again.
(I hope you fucking burn)
Yen 240 here we come...
Speaking of RBS, a good friend of mine and her husband recently sold their house in the UK, and took the rather large amount of cash into their NatWest account. I had been warning them about keeping large balances in any bank, but in order to illustrate the point more pungently, I dug up this gem (emphasis mine, and bear in mind that RBS owns NatWest):
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That means that when (not if) the next systemic crisis unfolds, DEPOSITORS FUNDS CAN AND WILL BE USED to "recapitalize" RBS (and its subsidiaries, including NatWest). If you know anyone in the U.K. who needs awakening, feel free to copy, paste and send. Here's the full report:From the RBS 2013 annual report:
RBSG or any of its UK bank subsidiaries may face the risk of full nationalisation or other resolution procedures, including recapitalisation of RBSG or any of its UK bank subsidiaries, through bail-in which has been introduced by the Financial Services (Banking Reform) Act 2013 and will come into force on a date stipulated by HM Treasury. These various actions could be taken by or on behalf of the UK Government, including actions in relation to any securities issued, new or existing contractual arrangements and transfers of part or all of the RBS Group’s businesses.
http://www.investors.rbs.com/~/media/Files/R/RBS-IR/annual-reports/natwest-ca-2013-final.pdfJust watched an interview posted on usawatchdog.com on this subject. Worth the watch.
Hey! Hey! USA! Who'd you torture to death today?
This should be considered a big RED ALERT! It is to late to reverse the weak yen policy, Japan has gone over the edge into the abyss. It is clear that the prospects for Japan are lousy. Simply put the country is to far in debt to ever pay it off. Remember that Japan has few natural resources and imports raw goods a weak yen will drive up the cost of these imports.
The days of huge surplus trade deficits that blessed Japan are gone and the writing is on the wall. Japan is facing massive debt that can only be addressed by printing more money and debasing their currency. This means Japan will be paying off their debt with worthless yen where possible and in many cases defaulting on promises made. Japan's public debt, which stands at around 230% of its GDP and is the highest in the industrialized world. They are past the point where they can return to a "free and fair market" interest rate marketing their bonds to the world and still be able to pay the debt service.
The moment the Japaneses stock market fails to rise enough to offset inflation and the people of Japan realize that even a weaker yen will not help we will see a tsunami of money fleeing Japan. This will constitute the end of the line for those left holding both JGBs and the yen. This has been a long time coming and I contend the cross-border flow of money leaving Japan is why some stock markets have remained so resilient . When Japan crumbles it will be felt across the world. More on this subject in the article below.
http://brucewilds.blogspot.com/2014/05/japan-sliding-towards-abyss.html