bloomberg.com
I'll give a math answer as to why, like ggersh, I am not so excited.
Bprice = P Exp(- R T), for zero coupon bonds, which are most sensitive to interest
rates. P is principal, R is interest rate. When R=0, then BPrice=P=100 and does not
change, yet you have to pay annual fee on JGBS (0.4%?) When R double - from, say,
0.01% to 0.02%, Bprice does not change much. It still stays at 100. You get a whole lot more price "motion"
with the Yen, which JGBS is shorting.
In a sense, when you buy JGBS, you are shorting Yen, not the government of Japan.
In a way you are shorting the Japanese government too, but you should understand, that
you do so by shorting Yen, not their bonds. -g-
So, you must bet on SHTF. What are
the chances? If one needs to bet, one should do so through interest rates swaps of sort.
Look at prices and see how all of them are close to 100 because of ZIRP.
In order to bet on rates effectively, one has to do interest rate derivatives such as swaps.
I may be incorrect, but these are just my thoughts - bond prices are not sensitive to interest
rates in ZIRP environment |
