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.
[10]
[11]
and TOPIX vs JGBs...
[12]
meanwhile, in 30Y JPY Swaps...
[13]
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...
[14]
as JGB 5s10s collapses back across its 20 year channel...
[15]
JGBs vs Trade Deficit...
[16]
and one of Kyle Bass' preferred ways to play Japan - through 1Y jump risk (CDS) - has more than doubled in the last 4 months...
[17]
Charts: Bloomberg