http://ransquawk.com/headlines/boj-says-to-purchase-jpy-1trl-worth-of-jgbs-with-maturities-over-5-years-and-under-10-years-under-enhanced-easing-commitment-08-04-2013
http://www.zerohedge.com/news/2013-04-07/kyle-bass-japanese-retirees-will-lose-half-their-life-savings
Submitted by Tyler Durden on 04/07/2013 16:14 -0400
and.....
http://silverdoctors.com/if-the-japanese-qe-hail-mary-fails/#more-24518
http://www.zerohedge.com/news/2013-04-06/ib-prepares-surge-japanese-bond-volatility-removes-all-intraday-margins-japanese-pro
Submitted by Tyler Durden on 04/06/2013 13:03 -0400
(UPDATE on JGB yield) After hitting the all-time low of 0.315% in the morning market, the yield on JGB 10 years reversed violently in the afternoon market, hitting as high as 0.65% when the bond futures started to collapse. Nikkei Shinbun quotes a bond strategist who spoke the truth:
and.....
http://www.zerohedge.com/news/2013-04-05/deutsche-bank-central-bank-intervention-we-are-flying-blind
Submitted by Tyler Durden on 04/05/2013 06:54 -0400
and......
http://www.zerohedge.com/news/2013-04-05/it-beginning-biggest-jgb-price-collapse-over-10-years-triggers-tse-circuit-breakers
Submitted by Tyler Durden on 04/05/2013 00:48 -0400
http://www.zerohedge.com/news/2013-04-04/japanese-bond-yields-collapse-boj-front-running
Submitted by Tyler Durden on 04/04/2013 20:19 -0400
http://www.zerohedge.com/news/2013-04-04/kyle-bass-japan-will-implode-under-weight-their-debt
Submitted by Tyler Durden on 04/04/2013 18:41 -0400
http://www.zerohedge.com/news/2013-04-04/cme-hikes-yen-nikkei-futures-margins-19-33
Submitted by Tyler Durden on 04/04/2013 18:06 -0400
http://www.zerohedge.com/news/2013-04-04/if-japans-shock-and-awe-qe-happened-us
( perspective........ )
Submitted by Tyler Durden on 04/04/2013 14:28 -0400
BOJ moves on QE.... BOE and ECB - not today as far as more QE.....
http://www.zerohedge.com/news/2013-04-04/overnight-sentiment-central-banker-bonanza
and....
http://www.zerohedge.com/news/2013-04-04/boj-unveils-shock-and-awe-quantitative-qualitative-easing
Submitted by Tyler Durden on 04/04/2013 01:08 -0400
BoJ says to purchase JPY 1trl worth of JGBs with maturities over 5 years and under 10 years under enhanced easing commitment
Says:
- To purchase JPY 200bln of JGBs with maturities over 10 years under new commitment.
- To purchase JPY 200bln of JGBs with maturities over 10 years under new commitment.
Update details:
- It was reported by Nikkei press on Sunday that the BoJ was expected to buy JPY 1.2trl in JGBs next week with over 5 years maturity remaining.
http://www.zerohedge.com/news/2013-04-07/kyle-bass-japanese-retirees-will-lose-half-their-life-savings
Kyle Bass: "Japanese Retirees Will Lose Up To Half Of Their Life Savings"
While Kyle Bass notably remarks that pinpointing the end of a 70-year debt super-cycle is naive, the combination of the resurgence of nationalism (impacting trade with China) and the dreadful impact of the earthquake/tsunami (drastically changing Japan's supply chain) has secularly shifted Japan's trade balance for the worst at a time when the current account is already negative."They are all in denial," Bass notes as the government has failed to deal with its problems over the last 20 years.
Simply put, Japan needs a Schumpeterian 'creative destruction' moment instead of the constant rolling of debts and expanding of government balance sheets to paper over the cracks. The 'moment' feels like it is now, he notes, expanding that "JPY could hit 200," as they lose control; following two decades of volatility-smoothing, the chance of a disorderly collapse are high.
Critically, he fears, "the social fabric of Japan will tear," as with one-third of the nations at retirement age, the fallout from the policies of Abe-Kuroda could cause them to "lose 30-50% of their life savings." What is perhaps even more concerning, he adds, "you are starting to see the central banks not trust each other."
At a certain point in time, "nationalist interest takes over the global [G7] kumbaya," and that is occurring now.
"When your debts are 24-times your government tax revenue, you have a secular decline in population, and all of the things are finally catching up to you, what happens when you have a debt crisis?"
Central Banks believe "Devaluation is 'supposedly' the way to freedom"
3:00 - Japan's tearing social fabric
4:30 - G7 Kumbaya unwind
6:00 - "There is no way out" for Japan - it's a matter of when not if. And "if there is no way out for them, there is no way out for the rest of us - unless we change the way we operate."
6:30 - "If there is no consequence to the US profligacy [rates not moving against them] well then they will keep spending." - "Central banks are enabling the spending"
7:15 - "The Modus Operandi of the west is running deficits; and what that has meant in the past is runaway cost-push inflation - and I think that is what we are going to see"
8:00 - "Investors are too complacent" - this is the single-most riskiest time to be complacent in our generation - "investing with the typical endowment model... is not going to work"
9:00 - "The insidious nature of a runaway inflation is that it bankrupts the middle class... the poor stay poor, the middle class (with savings in the banks) get wiped out, the wealthy (with productive assets) do the best"
9:40 - ... which leads to social unrest globally - and that is a problem...
and.....
http://silverdoctors.com/if-the-japanese-qe-hail-mary-fails/#more-24518
IF THE JAPANESE QE HAIL MARY FAILS…
http://www.zerohedge.com/news/2013-04-06/ib-prepares-surge-japanese-bond-volatility-removes-all-intraday-margins-japanese-pro
IB Prepares For Surge In Japanese Bond Volatility, Removes All Intraday Margins On Japanese Products
On Friday morning, after the humiliating for the BOJ halt of the ¥1 quadrillion Japanese government bond market, the second largest in the entire world due to unprecedented 13-sigma volatility, we joked that as a result of the central bank's desperation, it has now made trillions in the formerly world's "safest" security trade like a penny stock.
http://ex-skf.blogspot.com/2013/04/japans-debt-problem-visualized.html
THURSDAY, APRIL 4, 2013
Japan's Debt Problem Visualized
(UPDATE on JGB yield) After hitting the all-time low of 0.315% in the morning market, the yield on JGB 10 years reversed violently in the afternoon market, hitting as high as 0.65% when the bond futures started to collapse. Nikkei Shinbun quotes a bond strategist who spoke the truth:
低利回りでの買い手は日銀しかいない。投資家からの売りが出ると（債券を買い持ちできない）証券会社は先物などで損失回避のための売りを出さざるを得ず、債券先物の急落につながった
In the low-yield environment, BOJ is the only buyer [of JGB]. When investors start to sell, investment banks (who cannot buy and hold bonds) has to sell futures to avoid losses, resulting in the sharp drop in the JGB futures.
That's what you get, when the central bank corners the market. Japan's central bank is 55% owned by the national government.
========================================
A very good vid from Addogram:
========================================
A very good vid from Addogram:
Rise of the interest rate on the government bond to 4% and it's game over, the video says. Right now, in the broken bond market that from now on only front-runs Bank of Japan who will purchase 70% of issues each month, the yield of 10-year JGB is0.315%, the historical new low. According to Nikkei Shinbun, the market thinks it will breach 0.3% soon.
In the meantime, the Japanese stock market seems to be broken, thanks to the crazy central bankers working hard for the LDP administration. While the rest of Asia falls due to the growth and job concerns in the US, one of their chief export destinations, worries over the new strain of bird flu and worries over North Korea, Nikkei's on a crack, breaching 13,000 for the first time since the so-called "Lehman crisis" as the Japanese call the global financial crisis triggered by a host of financial meltdowns in the prominent US financial institutions including Lehman Brothers and AIG.
The Nikkei Average is currently up 475 points to 13,109, with the firm (almost religious) belief that the financial maneuvering will result in the prosperous real economy and that the higher stock market means the better real economy.
In the meantime, the Japanese stock market seems to be broken, thanks to the crazy central bankers working hard for the LDP administration. While the rest of Asia falls due to the growth and job concerns in the US, one of their chief export destinations, worries over the new strain of bird flu and worries over North Korea, Nikkei's on a crack, breaching 13,000 for the first time since the so-called "Lehman crisis" as the Japanese call the global financial crisis triggered by a host of financial meltdowns in the prominent US financial institutions including Lehman Brothers and AIG.
The Nikkei Average is currently up 475 points to 13,109, with the firm (almost religious) belief that the financial maneuvering will result in the prosperous real economy and that the higher stock market means the better real economy.
In a country where the Marxian economics is still taught and researched in universities, many Japanese don't have a clue how these central bankers worldwide think and behave. They clearly think the bankers have the best interest of average citizens in mind.
Just like in matters nuclear and radiation, "Well I don't know much about it but the government and those experts say it is safe, so who am I to argue?"
Just like in matters nuclear and radiation, "Well I don't know much about it but the government and those experts say it is safe, so who am I to argue?"
and.....
http://www.zerohedge.com/news/2013-04-05/deutsche-bank-central-bank-intervention-we-are-flying-blind
Deutsche Bank On Central Bank Intervention: "We Are Flying Blind"
Ordinarily in the first post we would recap any of the key overnight events, but in this case there was just one event of note ahead of today's non-farm payroll seasonally adjusted "noise": the halting of the Japanese Government Bond complex due to excessive volatility. Now, this is not some zero-liquidity penny stock or an algo fat binary finger: at last check there is one quadrillion yen in Japanese debt, which makes it the second biggest sovereign bond market in the world. Yet one glimpse at what transpired in overnight trading and one can see just why the Japanese regulators decided it is time to close all bond trading. The reason: the JGB's insane decision to literally reflate or bust, and with it the total loss of all signalling to various asset classes, because while the country is targeting 2% inflation, its bond curve is indicating the most epic deflation in history.The good news: the bond market reopened... eventually; the bad news: who knows if it will, the next time there is a 100% swing from low to high in the 10Y JGB bond yield in the span of hours. Which brings us to the point of this post, summarized best by Deutsche Bank's Jim Reid who overnight said it best: "we are now flying blind"... The central banks are now flying a plane that has lost all hydraulics and their only option is to add ever more power to the engines to pretend they are still in control.
From DB's Jim Reid:
The move by the BoJ plays into our 'Journey into the Unknown' thesis and its fair to say that there really is no precedent for what Central Banks are currently doing, or threatening to do, on a global scale. You'll be able to read chapter and verse from strategists trying to explain what's likely to result from such moves but the honest truth is that we are flying blind in terms of historical evidence even if we go back centuries. My guess is that medium-term global inflation is being locked in by these moves but that the first move is likely to be maintaining the low bond yield world for some time even if there are brief selloffs. For riskier assets, our simple models based on variables like the PMIs tell us that we may be due a set back soon. These models survived the liquidity burst of QE1 and QE2 but will they now be overpowered by the combined OMT potential, QE-infinity and the BoJ's new 'Carry-O-QE' (ok I know it won't catch on)? Our base case remains that we will eventually see a set back as we approach the end of H1 on weaker data (especially in Europe) but that outside of a shock, the downside will be perhaps limited by global Central Bank liquidity. Fascinating times and we can't help thinking that these moves are not without consequence. If it really is as easy as printing money then all Central Bank's would have done it a long time ago. That such a period for global CB's is unprecedented should serve as a warning to watch for unintended consequences.
and......
http://www.zerohedge.com/news/2013-04-05/it-beginning-biggest-jgb-price-collapse-over-10-years-triggers-tse-circuit-breakers
Is It Beginning? Biggest JGB Price Collapse In Over 10 Years Triggers TSE Circuit Breakers
Just over 4 hours ago we discussed the stunning collapse in 10Y Japanese bond yields. Since then - things have taken a very dramatic turn for the worse for bonds. 10Y JGB yields have exploded higher. The move from 32bps to 65bps triggered circuit breakers on the Tokyo Stock Exchange in JGB Futures trading as JGB prices plunged by their largest amount since September 2002. We can only imagine there is liquidations galore occurring given the massive outsize moves we are seeing in Japanese bonds, stocks, FX, swaps, and CDS. Did the BoJ just lose control?
Now that is a reversal!!
Biggest price drop in JGB Futures in over 10 years
Is the BoJ losing control?
Charts: Bloomberg
and....
http://www.zerohedge.com/news/2013-04-04/japanese-bond-yields-collapse-boj-front-running
Nikkei Soars, Japanese Bond Yields Collapse On BoJ Front-Running
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.
and TOPIX vs JGBs...
meanwhile, in 30Y JPY Swaps...
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...
JGBs vs Trade Deficit...
and one of Kyle Bass' preferred ways to play Japan - through 1Y jump risk (CDS) - has more than doubled in the last 4 months...
Charts: Bloomberg
http://www.zerohedge.com/news/2013-04-04/kyle-bass-japan-will-implode-under-weight-their-debt
Kyle Bass: "Japan Will Implode Under Weight Of Their Debt"
As the fast-money flabber-mouths stare admiringly at the rise in nominal prices of Japanese (and the rest of the world ex-China) stock prices amid soaring sales of wheelbarrows following Kuroda's 'shock-and-awe' last night, it is Kyle Bass who brings these surrealists back to earth with some cold-hard-facting. Out of the gate Bass explains the massive significance of what the Japanese are embarking on, "they are essentially doubling the monetary base by the end of 2104."
It is a "Giant Experiment," he warns, but when you are backed into a corner and your debts are north of 20 times your government tax revenue, "you're already insolvent." Simply put, Bass says they have to do something and they have to something big because they are "about to implode under the weight of their debt." For a sense of the scale of the BoJ's 'experimentation', Bass sums it up perfectly (and concerningly), "the BoJ is monetizing at a rate around 75% of the Fed on an economy that is one-third the size of the US!"
What they are trying to do is devalue the currency to attempt to become more competitive while holding their rates market flat - the economic zealots running the world's central banks believe they can live in that Nirvana - and Bass believes that is not the case, as they will lose control of rates, since leaving the zone of insolvency is impossible now. His advice, "if you're Japanese, spend! or take it out of your country. If you're not, borrow in JPY and invest in productive assets." Do not be long JPY or Japanese assets as he concludes with the reality of Japan's "hollowed out" manufacturing industry and why USDJPY is less important that KRWJPY.
http://www.zerohedge.com/news/2013-04-04/cme-hikes-yen-nikkei-futures-margins-19-33
CME Hikes Yen, Nikkei Futures Margins By 19%-33%
Two years ago, warning of a bubble in gold/silver/PMs was all the rage. Luckily, those days are long gone, allowing one to accumulative hard assets in peace, in a declining paper price environment, without the thundering herd in the rearview mirror. Nowadays, the ever-"vigilant" mainstream media has moved on, and has been so very observent to spot a new bubble in bitcoins. As we always do, we decided to have some fun at the MSM's expense, and tweeted the following earlier today:
http://www.zerohedge.com/news/2013-04-04/if-japans-shock-and-awe-qe-happened-us
( perspective........ )
If Japan's "Shock And Awe" QE Happened In The US....
- This is your QE on Bernanke: $85 billion per month or $1 trillion per year.
- This is your QE on Japanese monetary drugs: $200 billion per month or $2.4 trillion per year.
Why? Because the just announced "Shock and Awe" expansion of BOJ monetization takes the total monthly gross purchases to a whopping ¥7 trillion per month, or 80x less than Japan's total GDP of $5.9 trillion. Back in the US, the Fed is monetizing "just" $85 billion per month, or 187x less than US GDP of $15.9 trillion. In other words, if one were to pro-rate the latest Japanese monetization effort to the US, one would get a mind-blowing $200 billion per month and $2.4 trillion per year in pro forma QE every month.
Sadly, we have a sinking feeling, this is precisely the plan, with Japan in the role of the proverbial Canary in the Monetarist Coalmine. If Japan can pull this off for a few months, and when the US realizes it has to do much, much more to reflate the tens of trillions in excess debt, the Federal Reserve will be right there, and the column on the left will promptly become the Pro Forma column on the right.
BOJ moves on QE.... BOE and ECB - not today as far as more QE.....
http://www.zerohedge.com/news/2013-04-04/overnight-sentiment-central-banker-bonanza
Overnight Sentiment: Central Banker Bonanza
Submitted by Tyler Durden on 04/04/2013 - 07:05
With all three major non-Fed central banks on the tape today, all economic data will be merely "noise" as the market digests what the central-planners' intentions are. The BOJ came and went, and following its substantial balance sheet expansion announcement, which many called "shocking and awing" the USDJPY has pushed higher by 2.5 big figures, although not reaching the 96 levels seen prior to Kuroda's actual announcement. In fact, from this point on there is likely downside as Japan's biggest export competitor, South Korea, has no choice but to join the race to debase which in turn will be JPY-positive. The Bank of England is next, which as expected did nothing moments ago, and will keep doing nothing until Carney joins officially this summer. In some 45 minutes, the ECB headlines will hit the tape where Draghi may bur more likely may not lower deposit rates, and instead will focus on recent deterioration in the economy. None of this will be surprising, and the EUR continues to trade sufficiently weak in line with sub-200DMA levels seen in the past few weeks. What we look forward to the most will be Draghi once again discussing the legal term-sheet details of the ECB's OMT program. His answer will be amusing as there still is no answer, and the OMT is for all intents and purposes the biggest straw man ever conceived by a central bank.
and....
http://www.zerohedge.com/news/2013-04-04/boj-unveils-shock-and-awe-quantitative-qualitative-easing
BoJ Unveils 'Shock-And-Awe' Quantitative-Qualitative Easing
As Citi's Todd Elmer notes, today's BoJ outcome looks far closer to 'shock and awe' than disappointment. It appears the BoJ's actions may speak as loud as their words for now - JPY is weakening and the Nikkei is rallying after Kuroda's last shot at a first impression appeared to beat expectations (covering for disappointing macro data - despite six months of jawboning and a 20% devaluation). Expectations, though tough to extract given the range of possible actions, appeared centered on extending maturities of bond purchases, increasing the size (median expectations of around JPY5.2tn per month or 50% higher than in Q1), bringing forward the open-ended nature of the program, and increasing scope to foreign bonds and REITs.In his effort to do "whatever it takes", the BoJ is upping asset purchases, extending the maturity of purchases and merging its asset purchase program; increasing the size to JPY7tn and buy securities out to 40 years. Though no mention of foreign bond-buying was made, and increase in ETFs and REITs is included. They have given themselves a two-year window to achieve the 2% inflation goal - paging Kyle Bass - and ironically, as the news broke Tokyo was hit by a significant earthquake.
- *BOJ INTRODUCES "QUANTITATIVE, QUALITATIVE MONETARY EASING''
- *BANK OF JAPAN MERGES ASSET PROGRAM WITH REGULAR BOND BUYS
- *BANK OF JAPAN TO BUY LONGER-TERM GOVERNMENT BONDS
- *BOJ TO BUY 7T YEN OF BONDS PER MONTH
- *BOJ SETS TIME HORIZON OF TWO YEARS TO ACHIEVE INFLATION GOAL
- *BOJ CHANGES MARKET OPS TARGET FROM CALL RATE TO MONETARY BASE
- *JAPAN QUAKE INTENSITY 4 IN CHIBA, NEAR TOKYO, NHK SAYS
Abe will be pleased with the initial kneejerk off Kuroda's words...
The Nikkei naturally knee-jerked higher too - but is fading back a little now...
ad naturally all risk-assets are bid on the wave of FX carry exuberance... see printing money does make things all better...
Though it seems the bigger the Fed balance sheet relative to the BoJ, the weaker the JPY gets?
Charts: Bloomberg
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