If JGB investors 'believe' as Richard Koo earlier noted [9], in the BoJ's new actions and Abenomics (to double the monetary base and generate inflation), then, Kyle Bass explains [10], a rational investor is likely to sell a portion if not all of them. The BoJ only has JPY10 trillion cushion (after the JPY60 trillion deficit) to soak up this 'rational investor paradox' selling and this is dwarfed by the holdings of JGBs in the largest Japanese banks (who are now starting to rotate away from JGBs into foreign bonds). Simply out, Bass exclaims, they are going to have make the plan even bigger... if they are to successfully contain rates. With a quadrillion JPY of JGBs out there, if a mere 5% is sold (from 'Abe'lievers [11]) then Japan's Turbo QE is not big enough which leads to the paradoxical increase in the QQE, moar inflationary 'belief', and moar selling pressure... The BoJ has been in the market every day but 2 since April 4th trying to hold rates down (and is failing)...
Bass also explains his portfolio approach to positioning for Japan's problems - which is different from the mainstream media's perspective of being long the widow-maker...
and discusses the 'macro tourists' who are merely renting the Nikkei as opposed to owning it as evidenced last night - who do not comprehend the lack of improvement in the deficit despite the calamitous devaluation of the JPY (and a hollowed out manufacturing sector)...
Spend 7 minutes listening to some facts...