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Strategies & Market Trends : World Outlook -- Ignore unavailable to you. Want to Upgrade?

To: Les H who wrote (51078)	1/23/2026 11:46:06 AM
From: Les H	Read Replies (1) \| Respond to of 51350

The Japan bond wipeout was triggered by a significant trading event that took just $280 million to push the government bond market into a meltdown, resulting in a $41 billion wipeout across the Japanese curve. This sudden sell-off was attributed to Japan's adjustment to higher inflation and concerns about potential interest rate hikes by the Bank of Japan. The disconnect between the size of the wipeout and the trading volume highlights the vulnerabilities of Japan's illiquid bond market, which has become increasingly sensitive to external shocks. The disconnect between the size of the wipeout and the amount that actually traded shows how Japan’s sometimes illiquid bond market has become a weak spot in the global financial system. Subdued for years by the Bank of Japan’s massive stimulus, the world’s third-largest pile of government debt is now increasingly vulnerable to shocks after the central bank and domestic life insurers pulled back. “This is not a paradox: it is exactly what you expect in a market where depth is thin, dealer balance sheets are constrained, and prices are set by the marginal trade rather than by volume-weighted averages,” said Shoki Omori, chief desk strategist at Mizuho Securities Co. in Tokyo. Just $170 million traded in Japan’s most closely watched 30-year bond on Tuesday while another $110 million of the 40-year note changed hands, according to Japan Bond Trading Co. data compiled by Bloomberg. $280M of trading pushed Japan $41B bond wipeout \| BusinessMirror Hence, the Fed is now buying t-bills to force them to follow the FFR. This is about the third time.