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Tag Archives: jgb

Japan: Fall Like Germany, Or Give Hope To The Rest of the World?

After trading overnight in Asia, Japan’s government bond market is within a hair’s breadth of setting new record lows. The 10-year JGB is within a basis point and a fraction of one while the 5-year JGB has only 2 bps to reach. It otherwise seems at odds with the mainstream narrative at least where Japan’s economy is concerned. Record lows in Germany, those seem to make sense. By every account, the German economy is in trouble. So obvious, even the notoriously frugal government is floating...

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Not Bond Bull, The Bull of Bonds

In January 2018, Bill Gross was at it again. Famous for being the longtime public face of PIMCO, he’d acquired as much notoriety for being the boy who cried bear. By the way he talked and by what he predicted, you’d have to think the US Treasury had visited some horrible circumstance on a young Bill early in his life. It’s like he was possessed with unnatural hatred bonds for some reason. Gross: Bond bear market confirmed today. 25 year long-term trendlines broken in 5yr and 10yr maturity...

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Factoring the Lumps in the (global) Slump

The British manufacturing sector pulled the English economy into contraction for the first time since 2012. Real GDP declined by 0.2% Q/Q in the second quarter of 2019, another minus sign to add to the growing global list. Goods production fell sharply, down 2.3% in Q2 from Q1. It was the biggest decline since 2009. And it is being blamed on Brexit “uncertainty.” The most powerful forces in the entire world right now are, we are told, varying brands of the stuff. There’s Brexit, populists,...

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Yield Plunge: Running Out of Dollars, and Excuses

As of today’s close, there are only 22 trading days in the entire history of Japan’s government bonds (JGB) where the yield (or “yield”) on its 10-year paper has been more negative. Those 22 all came clustered together in June and July 2016. In other words, Japan’s bond market is today comparable only to that one period at the utter depths of Euro$ #3. This Euro$ #4 isn’t just a US problem or one for Europe. There is no either/or. It is perfectly clear in showing up across all the majors, as...

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Some Real Hope Appears In Japan, Of All Places

There are things to feel optimistic about. I’ve been pegged as a doom and gloomer, and so long as things remain as they are, I don’t see what’s wrong about it. Long term, however, I’m as optimistic as anyone. There’s a gigantic wave of economic growth and prosperity just waiting to be unleashed – the moment the shackles of benign neglect are discarded in favor of competence and honesty. Those who have been calling for a BOND ROUT!!! the past few years, just you wait. To get to that point,...

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Globally Synchronized (Bond Yields)

If you have nothing left, it can sound like a winning argument but you have to really try hard enough. In October 2015, with another false dawn dawning on the public, former Federal Reserve Chairman Ben Bernanke wrote and op-ed published in the Wall Street Journal. As had become his habit, it was full of praise – for his own work. Though he likely didn’t choose the title, it reflected his article nonetheless; and it tells you all you need to know about it. How the Fed Saved the Economy. How...

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The Forced Exile Of Bond Vigilantes

Japan is the very model of fiscal irresponsibility. If ever there was a bond vigilante, surely they would have a Japanese address. At the end of what was the Bank of Japan’s 133rd fiscal year, on March 31, 2018, Japan’s central bank reported total assets of ¥528,285,679,854,140. Of which, ¥448,326,107,324,120 was Japanese government bonds (JGB). Officials became increasingly confident these were sufficient balances whereby the bank’s top managers could openly plan an end to the programs...

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Same Planet, Very Different Worlds

This is really getting out of hand. For the fourth day in a row, unofficially, effective federal funds or EFF remains above IOER. At the same, now the 10-year UST yields less. What was last week pretty concerning stuff before the Fed’s capitulation is this week whatever category lies below. This is not a resumption of the bond bull market. Despite so many popular stories which had predicted it being called off throughout 2018, a bond bull market never existed. To begin with, there is...

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Jay Powell Is In The Way (Literally, for the UST Curve)

Early in May 2013, the word “taper” exploded into the mainstream. It was everywhere, scarcely an article written or news story pieced together which hadn’t included the term (even though Ben Bernanke never actually said it). The so-called tantrum spread like wildfire simply because of what it represented, the very thing everyone had been waiting for. Confirmation at last the long economic nightmare, about half a decade to that point, was over. For much of the rest of 2013, there were...

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Lost In Translation

Since I don’t speak Japanese, I’m left to wonder if there is an intent to embellish the translation. Whoever is responsible for writing in English what is written by the Bank of Japan in Japanese, they are at times surely seeking out attention. However its monetary policy may be described in the original language, for us it has become so very clownish. At the end of last July, BoJ’s governing body made a split decision. By a vote of 7 to 2, the central bank adjusted its bond buying policy....

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