JGB smash, these are big issues and very large losses to principal, 10 bps is a big deal. Signs the BOJ is going to try and manipulate and ramp up this market also. "Shortage of specific securities", Jees more Orwellian Animal Farm-speak from these clowns. I'm telling ya, the cogniscenti is going to wake up in a cold sweat to this nonsense. Must be tough to try and keep not one, but the two biggest bond markets from crumbling, especially when you have to borrow from Peter to pay Paul, when you've already borrowed from Paul to pay Peter, and Peter borrows from who? So I suppose they (and the US) just monetize it? That'll be good for the crack-up boom.
Japan's 10-Year Bonds Tumble; Yield Climbs to Five-Month High
April 5 (Bloomberg) -- Japanese bonds tumbled, driving 10- year yields to a five-month high, after a report showing the fastest U.S. job creation in four years fueled speculation Japan's export-led economic recovery will accelerate.
Bonds also fell as stocks gained following Friday's report that the U.S. economy added 308,000 jobs last month, the most since April 2000. Exports accounted for about a third of Japan's fourth-quarter growth of 6.4 percent, its fastest in 13 years.
``The jobs report is definitely negative for bonds,'' said Norihisa Takao, who helps oversee the equivalent of about $48 billion of fixed-income securities at Daiwa Asset Management Co., the largest manager of Japanese money market funds. ``The U.S. may help Japan's economy continue to grow at a good pace.''
The benchmark 1.3 percent bond due in March 2014 fell 0.556 to 98.311 as of 3:48 p.m. in Tokyo, according to Japan Bond Trading Co. Its yield rose 6.5 basis points to 1.495 percent. The yield reached 1.50 percent, the highest for a benchmark since Nov. 11. A basis point is 0.01 percentage point.
The Nikkei 225 Stock Average rose 1.2 percent to 11,958, its highest close since May 2002.
Japanese benchmark bonds plummeted in the fiscal year ended Wednesday, with yields rising about three quarters of a percentage point, their largest increase since the 12 months ended March 1990, as surging stocks and economic growth cut demand for government debt.
Bond Losses
Ten-year bonds handed investors a loss of 4.7 percent including reinvested interest in the fiscal year. The Nikkei 225 Stock Average rose 47 percent, it's biggest fiscal year gain since 1973.
``A break of 13,000 is coming into sight for the Nikkei by this summer,'' said Makoto Yamashita, an economic strategist at UFJ Tsubasa Securities Co. in Tokyo, one of 23 banks and securities companies that discuss bond sales with the Ministry of Finance. ``Pressure for higher yields is likely to remain the main theme.''
Ten-year bond futures for June delivery fell 0.71 to 137.10 as of the close at the Tokyo Stock Exchange.
The median forecast for U.S. jobs growth was for an increase of 120,000, according to 71 economists polled by Bloomberg News. Japan's jobless rate was unchanged at 5 percent in February. It is down from a record 5.5 percent in January 2003.
Recovery Is Spreading
``The recovery path is quite clear and it's spreading to consumers,'' said Chua Soon Hock, a director at Asia Genesis Asset Management Pte in Singapore, who oversees $13 million. ``The employment situation has improved tremendously.''
Chua's Japan Marco Fund, which invests in stocks and bond futures, returned 72 percent last year. He sold bond futures in the past week, he said.
Japanese 10-year bond yields have tracked the Nikkei 225 in the past year with a correlation of 0.90. A correlation of 1 would mean the two moved in lock step.
Investors also avoided buying 10-year bonds on concern demand may decline at a government sale of 1.9 trillion yen ($18.2 billion) of the securities tomorrow.
The previous 10-year sale on March 2 drew bids worth 1.99 times the amount of debt offered, the lowest since July.
``There's a question mark as to whether the auction can draw more demand than before,'' said Daiwa Asset's Takao.
The Bank of Japan may approve measures this week to prevent sharp swings in Japanese government bonds, Nikkei English News reported on Saturday, without citing anyone.
The central bank will hold a two-day policy board meeting starting Thursday. In February it said it would study measures to introduce ``a facility which provides Japanese government securities held by the bank to the market.''
Lending of such securities would be temporary and is intended to ``enhance liquidity of Japanese government securities markets,'' the bank said. The central bank wants to avoid a shortage of specific securities, it said. |
