Ahead of tonight’s 10Y JGB auction and reportedly the unleashing of Abe’s fiscal stimulus, it appears the world’s investors are losing faith in the Bank of Japan’s buying power and the MoF’s credibility as Japanese government bonds are collapsing for the 3rd day in a row. With the biggest crash in prices (JGB Futures) since May 2013 (back to 5 month lows), yield across the entire JGB curve are exploding higher since Kuroda punted last week and questioned monetary policy effectiveness.
As the world awaits Japan’s over-promise and under-deliver fiscal stimulus…
“The fiscal spending will probably include public works spending, so we can expect something of an economic boost,” said Masaki Kuwahara, an economist at Nomura Securities Co. in Tokyo. But such growth may not be sustainable. “What Japan needs to do is to spur more demand and increase productivity by pushing through deregulation, increasing the nation’s potential growth rate.”
It appears demand for direct monetization of the debt and questioning BoJ capabilities (and therefore independence)…
- *JAPANESE GOVT GROWS SKEPTICAL OF BOJ’S INFLATION TARGET: NIKKEI
- *SAKAKIBARA SAYS HE DOESN’T THINK ABENOMICS HAS FAILED
- *JAPAN FISCAL STIMULUS PLAN ALREADY PRICED IN, SAKAKIBARA SAYS
- *ABE STIMULUS PLAN WON’T HAVE A MAJOR IMPACT, SAKAKIBARA SAYS
- *DLR/YEN WILL SLOWLY APPRECIATE TO 100 YEN: SAKAKIBARA
- *HAMADA REITERATES OPPOSITION TO HELICOPTER MONEY
- *HAMADA FAVORS RECOGNIZING DE-FACTO DEBT MONETIZATION
- *HAMADA FAVORS JAPAN PROCLAIMING A DEBT-MONETIZING POLICY
JGB yield rises on concerns that BOJ’s planned comprehensive assessment of its policy, announced by Kuroda last week, will set back its monetary-easing stance
Is sending investors fleeing from JGBs…
As yields spike post-BoJ…
Is this the market pushing back demanding BoJ action… or the rebirth of the widowmaker trade?
via http://ift.tt/2aLbgPn Tyler Durden