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Bank Of Japan Unleashes Yield Curve Chaos: JGBs Inverted At Short- And Long-End
03-22-2016, 10:26 PM,
#1
Bank Of Japan Unleashes Yield Curve Chaos: JGBs Inverted At Short- And Long-End
Bank Of Japan Unleashes Yield Curve Chaos: JGBs Inverted At Short- And Long-End

<p>You know you have 'tinkered' too much in the machincations of what dealers now call a &quot;dead market&quot; when the <strong>world's largest sovereign bond market is inverted at the short-end and the long-end. </strong>The utter folly of Peter Pan policy has sent 10Y JGB yields below the BoJ's overnight call rate for the first time ever...</p> <p><a href="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2016/03/22/20160322_japan1.jpg"><img height="313" src="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2016/03/22/20160322_japan1_0.jpg" width="600" /></a></p> <p>Japan&rsquo;s 10-year bond yield dropped to a record -12.5bps Friday, falling below the the negative deposit rate introduced by the Bank of Japan last month, after the central bank&rsquo;s operation to buy long-term debt met the lowest investor participation on record. <em><strong>Yields on government debt have tumbled since the BOJ announced Jan. 29 that it would start charging 10bps interest on some deposits held at the bank starting Feb. 16. </strong></em></p> <p><strong>40Y Yields are down a stunning 90bps since the BoJ went full retard... to record lows.</strong></p> <p><a href="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2016/03/22/20160322_japan3.jpg"><img alt="" src="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2016/03/22/20160322_japan3_0.jpg" style="width: 600px; height: 316px;" /></a></p> <p>&nbsp;</p> <p>AND yields are so low that demand for 40Y JGBs has driven its yield below the 30Y yield by the most ever...</p> <p><a href="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2016/03/22/20160322_japan2.jpg"><img alt="" src="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2016/03/22/20160322_japan2_0.jpg" style="width: 600px; height: 316px;" /></a></p> <p>&nbsp;</p> <p>As Bloomberg notes, Japan&rsquo;s long-term bond yields extended their push to record lows, <strong>driven by a shortage as the central bank buys record amounts of securities. </strong></p> <blockquote><div class="quote_start"><div></div></div><div class="quote_end"><div></div></div><p>Investors are hoarding the debt because it still pays interest, while shorter maturities have negative yields.</p> <p>&nbsp;</p> <p><strong>&ldquo;We&rsquo;re in a situation where traders have no stock of the bonds,&rdquo; </strong>said Hideo Suzuki, the chief manager of foreign exchange and financial products trading at Tokyo-based Mitsubishi UFJ Trust &amp; Banking Corp.</p> </blockquote> <p>A double inversion - we are sure just a little more debt monetization and the 'deflation mindset' will be vanquished.</p> <p>Crucially,&nbsp; Japanese bond investors are increasingly reluctant to sell their holdings of longer maturities to the central bank as the pool of positive-yielding debt shrinks.</p> <p><u><strong>This means, as BNP Paribas warns, that there is a risk that The BoJ&rsquo;s bond buying operations will fail to meet target this month, </strong></u>Tomohisa Fujiki, chief rates strategist at the bank.</p> <p>In other words - <strong>Kuroda just hit the limit of his lies</strong> - any more buying from here and arguing that this is not direct debt monetization is simply folly. And as he reminded the world's investors recently - just like Peter Pan, once you stop believing, monetary policy's effectiveness is destroyed.</p> <p><em><strong>We can only imagine the capital controls that are coming...</strong></em></p> <div class="field field-type-filefield field-field-image-teaser"> <div class="field-items"> <div class="field-item odd"> <img class="imagefield imagefield-field_image_teaser" width="960" height="506" alt="" src="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/20160322_japan2.jpg?1458692963" /> </div> </div> </div><br clear='all'/><br/><br/><a href="http://rc.feedsportal.com/r/247395560383/u/49/f/645423/c/34894/s/4e732017/sc/24/rc/1/rc.htm" rel="nofollow"><img src="http://rc.feedsportal.com/r/247395560383/u/49/f/645423/c/34894/s/4e732017/sc/24/rc/1/rc.img" border="0"/></a><br/><br/><a href="http://rc.feedsportal.com/r/247395560383/u/49/f/645423/c/34894/s/4e732017/sc/24/rc/2/rc.htm" rel="nofollow"><img src="http://rc.feedsportal.com/r/247395560383/u/49/f/645423/c/34894/s/4e732017/sc/24/rc/2/rc.img" border="0"/></a><br/><br/><a href="http://rc.feedsportal.com/r/247395560383/u/49/f/645423/c/34894/s/4e732017/sc/24/rc/3/rc.htm" rel="nofollow"><img src="http://rc.feedsportal.com/r/247395560383/u/49/f/645423/c/34894/s/4e732017/sc/24/rc/3/rc.img" border="0"/></a><br/><br/><a href="http://da.feedsportal.com/r/247395560383/u/49/f/645423/c/34894/s/4e732017/sc/24/a2.htm"><img src="http://da.feedsportal.com/r/247395560383/u/49/f/645423/c/34894/s/4e732017/sc/24/a2.img" border="0"/></a><img width="1" height="1" src="http://pi.feedsportal.com/r/247395560383/u/49/f/645423/c/34894/s/4e732017/sc/24/a2t.img" border="0"/><img width='1' height='1' src='http://zerohedge.feedsportal.com/c/34894/f/645423/s/4e732017/sc/24/mf.gif' border='0'/><img src="http://feeds.feedburner.com/~r/zerohedge/feed/~4/Ya2knufTgXo" height="1" width="1" alt=""/>

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