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Strategies & Market Trends : John Pitera's Market Laboratory -- Ignore unavailable to you. Want to Upgrade?

To: John Pitera who wrote (18356)	8/8/2016 3:10:38 AM
From: John Pitera	1 Recommendation Recommended By richardred Respond to of 33421

Why Investors Everywhere Should Watch Japan’s Bond Market Japan’s position as the land of rising bond yields merits close attention Japan’s position as the land of rising bond yields merits close attention ENLARGE An electronic stock board displaying the yield for 10-year government bond outside a securities firm in Tokyo in June. In less than a week, 10-year Japanese government bond yields have surged. PHOTO: BLOOMBERG NEWS By Richard Barley Aug. 2, 2016 8:40 a.m. ET Reminder: bond yields can rise as well as fall. A glance at Japan should give investors who have reveled in this year’s bond rally pause. More testing times could lie ahead. In less than a week, 10-year Japanese government bond yields have surged higher. Last Wednesday, they stood at minus 0.29%; on Tuesday, they closed at minus 0.07%, having come close to zero, as a poorly-received auction added to the disappointment following the Bank of Japan’s failure last week to deliver a monetary big bang. The move could yet be contained to Japan; the bond market there is dominated by domestic players and tends to move to the beat of its own drum. So far, U.S. Treasurys and German bunds haven’t moved in a similarly violent way, although yields have risen modestly. In Europe in particular, the effect of European Central Bank bond purchases is likely weighing on long-dated bond yields; that in turn may help keep a cap on U.S. yields, with Germany acting as an anchor. But rising Japanese yields could yet make foreign bonds less attractive to Japanese investors, removing a support. A clash of forces is building, however, as questions arise about whether monetary policy makers are running short of options; increasingly, markets have been underwhelmed by the outcome of central bank decisions. This week’s Bank of England meeting could be telling; while Brexit is a local economic shock, not a global one, the central bank’s response will have wider resonance in showing how much room for maneuver policy makers have. Moreover, a debate about making greater use of fiscal policy is gathering steam. That would be bearish for bonds. Japan’s new ¥28 trillion ($274 billion) stimulus package, approved by cabinet Tuesday, is a case in point, although it isn’t seen as a game-changer for the country’s economy—nor likely for bond yields, as details of the plan had leaked before yields started moving. At the same time, jitters persist about the global economy. Oil prices entered a bear market Monday, and central bankers may be worrying about continued low inflation. That would require a further policy response, the expectation of which would at least initially support bond prices. The problem is that the bond market is already deep into uncharted territory, with negative yields abounding and some governments being paid outright to borrow. *Even those investors who have called the market right so far can’t afford to feel comfortable in this environment.* Write to Richard Barley at richard.barley@wsj.com wsj.com

To: John Pitera who wrote (18356)

12/12/2016 3:44:19 AM

From: John Pitera

1 Recommendation

Recommended By
roguedolphin

Respond to of 33421

July of 2016 is when we saw the ending of the nearly 36 year cycle in the secular bull market in bonds with yields going lower and lower. The Japanese who had created the biggest speculative bubble in Japanese equities ( 44% of global market capitalization) had also created a massive bubble in real estate in Japan, Hawaii, NY.... where they were sold Rockefeller Center, the Citibank Building, The Chase Manhattan building, Chemical, Manny Hanny, Exxon, Mobil........ Pebble beach..... as 135 lb Takeru Kobayashi Nathan's 4th of July hot dog eater... there seemed no limit as to what the Japanese would try to subsume and add to their neverending global portfolio's and dominance of Japanese management techniques.. that were taught at Harvard Business school, Dartmouth..... at top companies in the US such as Exxon, IBM, GE and in numerous case studies.

When the tremendous leverage and interlocking relationships between Large Japanese consortium's what happened is that instead of non performing and overvalued assets getting marketed down; bankruptcies occurring, instead as part of the 20th century culture of the Japanese saving face.... the assets that if marked to market would have instigated a whole sale cleaning of non performing and widely overvalued assets was allowed to not occur... since this was the Japanese way. It did not advance Japan's economic interests.... and that goes a long way to explaining how Japanese went from being the economy that was destined to take over the world and has given us the much reduced stance and the slowly acquired understanding of the Greek word Hubris.. As Bankers Trust trader Tom Wallace always told me that Hubris is the fall of man.

Now this is chapter one of how Japan has indeed gone on to take us into the "Alice through the looking glass world of Negative government rates on JGB's.... and in fact, created a rally from April until July of 40% in price on Long dated Japanese Government bonds.

what the upcoming chapters will examine is how Japan reached the Vortex of Truth in their efforts to drive long government rates to the lowest lows that we would experience in our lifetimes and when they realized that the strategy was literally and metaphysically bankrupt.

that occurred in the beginning of July of this year as the market cognoscenti had started to realize that time and price of the the 35 year 6 month increase in US 30 year rates that began on April 22 1946 at 2.30% and ended on Oct 19th 1981... was reaching it's Natural GANN time and price achieving equality was occurring as the Japanese Government made a dramatic reversal in direction at the start of July of this year.

Observe with this chart....

To: John P who wrote (18355)	8/8/2016 3:00:39 AM
From: John P	Read Replies (2) of 18504

Japanese Bond Selloff Pushes Yields Near Positive Investors have been shedding Japanese government bonds since Friday’s central-bank disappointment By RACHEL ROSENTHAL and HIROYUKI KACHI Updated Aug. 2, 2016 10:02 a.m. ET A selloff in Japan’s 10-year government bonds sent these negative-yielding assets within a hair of positive territory. Yields on the benchmark 10-year Japanese government bond rose Tuesday as high as minus-0.025%—the highest level since March 16—compared with minus-0.145% Monday. They were around minus-0.06% late afternoon in Asia. Yields rise when bond prices fall.

The 0.2-percentage-point climb in yields over three sessions is the biggest move since May 2013, a month after Bank of Japan Gov. Haruhiko Kuroda introduced his first “bazooka” of monetary easing.

Japanese government-bond prices have been falling since Friday, when the central bank announced what amounted to modest policy tweaks—dashing expectations of an interest-rate cut further into negative territory and an expansion of asset purchases. The central bank’s easing program has fueled the fantastic run in bond prices since it started three years ago, so any hints the BOJ might be losing its punch has spooked bond investors.

Selling accelerated on Tuesday in the run-up to a government auction of 10-year bonds, and continued when results showed that demand remains weak.

Beyond the pervasive sense that the Bank of Japan’s monetary policy has reached its limit, the market was rattled by the central bank’s saying it plans a “comprehensive assessment” of policy in September. The rare bit of guidance has stirred questions among investors and analysts about what the BOJ—with a rich history of surprising markets—could be up to.

“What caught the market off-guard and was shocking for us was not that [the BOJ] would postpone additional easing, but rather that they are reviewing the structure of the current market,” says Tadashi Matsukawa, head of Japan fixed income at PineBridge Investments in Tokyo, who manages ¥80 billion ($782 million) in assets. “That means that potentially [the BOJ] might tighten rather than ease, and that’s a source of confusion.”

What shape any tightening could take is anyone’s guess. One option, for example, would be adjusting its ¥80 trillion annual asset-purchase target to a range, and reducing its lower boundary to ¥60 trillion but raising its upper boundary to ¥100 trillion, says Shuichi Ohsaki, a rates strategist at Bank of America Merrill Lynch in Japan.

Limiting asset purchases would damp the appetites of investors who have been buying shorter-dated Japanese government bonds, despite their negative yields, with the expectation of selling them later to the BOJ at even higher prices.

ENLARGE

The Bank of Japan’s Haruhiko Kuroda announced modest changes Friday. PHOTO:KAZUHIRO NOGI/AGENCE FRANCE-PRESSE/GETTY IMAGES

BOJ Gov. Haruhiko Kuroda suggested that market players are mistaken if they expect the comprehensive assessment to lead to tightening. “I don’t think it will produce such results,” he told reporters following a meeting with Finance Minister Taro Aso. “There is no change in our policy stance to push down the entire yield curve” to stimulate growth and generate 2% inflation.

On Tuesday, the market was particularly tense ahead of a Ministry of Finance auction of more than ¥2 trillion in 10-year bonds. Demand was weaker than usual, but some market participants were reassured when it emerged that big Japanese banks bought up large chunks of the issuance, a sign of confidence that prices would arrest their downward spiral.

Mitsubishi UFJ Morgan Stanley Securities was the biggest buyer, snatching up ¥585 billion—27% of the total issuance—according to Quick.

PineBridge’s Mr. Matsukawa said the rise in 10-year yields was an “opportunity to buy,” though he would be stepping in “cautiously.”

Despite the cloudy outlook, analysts say they are skeptical that selling will continue, given the BOJ’s commitment to easing.

“The negative-rates policy is under way,” said Masahiro Ichikawa, senior strategist at Sumitomo Mitsui Asset Management, adding that the 10-year yield should eventually go back to the minus-0.1% interest rate the BOJ introduced earlier this year.

Earlier Tuesday, Japanese Prime Minister Shinzo Abe ’s cabinet also approved a ¥28 trillion ($274 billion) stimulus package, a widely telegraphed action that analysts said had already been priced in by markets.

—Kosaku Narioka contributed to this article.

http://www.wsj.com/articles/japanese-bond-selloff-pushes-yields-near-positive-1470137561

and additional chapter of this story shall be written..

most intriguing on how the :For the Bank of Japan, a Tightening Squeeze
In a Trump-fueled turnaround, the BOJ may have to lift its 10-year government-bond target from the recently set zero

To: John Pitera who wrote (18356)	10/3/2017 1:44:04 PM
From: The Ox	1 Recommendation Recommended By John Pitera Read Replies (1) \| Respond to of 33421

JP: the above link is where I noted and posted on 08/08/2016 a chart that the BOJ had changed direction from lower and lower Negative interest rates and had gotten religion on moving out of debt negative territory for JGB's ALSO: (Institutional Investors in Japan this year have seen there 30 year JGBbonds appreciate 40 to 50% in 5 months as prices have zoomed higher even as rates are negative...part of the post from below)