Japan

The Bank Of Japan Has Betrayed Its People

The Bank of Japan’s unexpected rate cuts to negative are a desperate attempt to help out The Fed and to support the dollar at the expense of the aging Japanese population.

Negative Interest Rates Already In Fed’s Official Scenario

"The severely adverse scenario is characterized by a severe global recession, accompanied by a period of heightened corporate financial stress and negative yields for short-term U.S. Treasury securities.... As a result of the severe decline in real activity and subdued inflation, short-term Treasury rates fall to negative ½ percent by mid-2016 and remain at that level through the end of the scenario."

Rewardless Risk

You know what negative rates are? They are the final stripping away of the illusion that central bankers somehow exist above and separately from domestic politics, that they are wise and able stewards of financial stability. Nope.

Ferrari Crashes

Another "no brainer" bites the dust. Ferrari is halted limit down in Milan trading and is crashing in US trading - now down over 40% from its "successful" IPO day highs...

Paying A Corporation To "Buy" Its Debt? It's Coming Soon, Jim Reid Warns

As a result of the rush to global NIRP, which now sees central banks and their sovereigns accounting for over 25% of global GDP, amounting to around $6 trillion in government bonds, trading with negative yields, a question has emerged: when will corporate bonds follow this govvie juggernaut and how soon until investors pay not government but companies to borrow? That is the focal piece in today's note by our favorite DB credit strategist Jim Reid who muses as follows.

Groundhog Day Trading: Stocks Slide As Oil Plunge Returns; BP Suffers Biggest Loss On Record

It certainly does feel like groundhog day today because while last week's near record oil surge is long forgotten, and one can debate the impact the result of last night's Iowa primary which saw Trump disappoint to an ascendant Ted Cruz while Hillary and Bernie were practically tied, one thing is certain: today's continued decline in crude, which has seen Brent and WTI both tumble by over 3% has once again pushed global stocks and US equity futures lower, offsetting the euphoria from last night's earnings beat by Google which made Alphabet the largest company in the world by market cap.

Global Bond Yields Extend Collapse As German, Japanese Hit New Record Lows

Whether front-running or fear-based (or both), the actions of BoJ's Kuroda last week have driven global bond yields into freefall with JPM's global index at 9-month lows and BofA's at 12-month lows. Overnight saw short-end JGBs push below the BoJ's -10bps threshold and 10Y rates push towards NIRP to record lows. German bonds extending their epic voyage into fantasy and hit new record lows across the curve with 5Y at -32bps.

Key Events In The Coming "Payrolls" Week

After last week's relatively quiet, on macro data if not central bank news, week the newsflow picks up with the usual global PMI survey to start, and end the week with the US January payrolls report.

Frontrunning: February 1

  • Stocks cautious after rocky China data, bonds fly high (Reuters)
  • Oil falls on China data, fading prospect of OPEC action (Reuters)
  • Republican Vote in Iowa Caucus Hinges on Newcomer Turnout (WSJ)
  • When Trump tells supporters not to donate, they mostly listen (Reuters)
  • Goldman Sachs Employees Shift to Rubio as Bush Support Fades (BBG)
  • Four Theories on How Oil Has Hypnotized the Global Stock Market (BBG)