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Strategies & Market Trends : Mish's Global Economic Trend Analysis
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To: mishedlo who wrote (22326)1/28/2005 9:21:48 AM
From: Wyätt Gwyön  Read Replies (2) of 116555
 
for hedge funds, they wouldn't be buyers, they'd be sellers--borrow short and lend long. so if you borrow at 17 PPM and lend at 1.34%, the net is almost 1.34%. now that US yield curve has flattened, the spread is almost the same.

as for who demands them, i imagine it is mainly buyers like Japanese insurers. there could be tax reasons, and also, bank interest payments are even lower--plus, bank interest income carries a flat 20% tax in Japan. not sure how JGBs are taxed. Japanese own 96% of their own debt.
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