Monday, March 08, 2010

Maybe This Time It Is Different.........

So far every bet against the Japanese bond market was a disaster..... But the latest move from the GPIF ( $1.37 trln / 66.32percent of its assets in domestic bonds ! see Profile GPIF Government Pension Investment Fund, Japan ) is really looking "unconventional".....

Bisher ist jeder der gegen japanische Staatsanleihen (JGB) gewettet hat übelst auf den Bauch gefallen.... Da der letzte Schritt des 1.37 trln $ schweren und zu knapp 66% in JGB´s investierten GPIF ( mehr Details GPIF Government Pension Investment Fund, Japan ) allerdings doch recht "unkonventionell" daherkommt ist der Ausgang zwischen Bullen und Bären wohl ungewisser denn je.....

H/T Claire Morel / Reuters

‘Japan’s brewing fiasco’ SocGen’s Dylan Grice via FT Alphaville

The biggest JGB holder on the planet – the Government Pension Investment Fund (GPIF) – which has already admitted it’s no longer able to roll maturing bonds, has announced that it will open credit lines so it doesn’t have to sell them to fund its obligations…

To spell that out: we are going into a year in which the government has ¥213 trillion of bonds to roll over… and the biggest holder of JGBs is openly admitting he has no new inflows of money

Click here & here to get the entire report... Some pretty scary charts & the following stat............

Den kompletten Research Report gibt es hier & hier ... Einige extrem unschöne Charts sowie die nachfolgende Zahl..........

So who will fund the Japanese government´s deficit in the future? It is not likely to be the international capital markets, especially if its bonds are offering only a 1.5% yield.

But if international investors were to demand triple that, pricing JGBs in line with international bond market peers (all priced too generously in my opinion) the game would soon be up because Japan´s current debt service already amounts to 35% of pre-bond issuance revenues.

H/T Zero Hedge

For more on this topic make sure you visit the excellent slide show Japan - The Point Of No Return from Vitaliy N. Katsenelson via Barry

Wer mehr zu diesem Thema sehen möchte dem empfehle ich die erstklassige Ansammlung von Charts Japan - The Point Of No Return von Vitaliy N. Katsenelson via Barry

GOLD Is Not A $ Story........ ;-)

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Blogger jmf said...

The Mother of All Carry Trades has Started ZH

11:12 AM  
Blogger jmf said...

Japan’s Slow-Motion Crisis Ken Rogoff

As the population ages and shrinks, more people will retire and start selling those government bonds that they are now lapping up. At some point, Japan will face its own Greek tragedy as the market charges sharply higher interest rates.

1:42 PM  
Blogger jmf said...

Public Pension Funds Are Adding Risk to Raise Returns NYT

states and other bodies of government are seeking higher returns for their pension funds, to make up for ground lost in the last couple of years and to pay all the benefits promised to present and future retirees. Higher returns come with more risk.

“In effect, they’re going to Las Vegas,” said Frederick E. Rowe, a Dallas investor and the former chairman of the Texas Pension Review Board, which oversees public plans in that state. “Double up to catch up.”

Though they generally say that their strategies are aimed at diversification and are not riskier, public pension funds are trying a wide range of investments: commodity futures, junk bonds, foreign stocks, deeply discounted mortgage-backed securities and margin investing. And some states that previously shunned hedge funds are trying them now

10:02 PM  
Blogger francois-guillaume said...

the BOJ will buy more and more JGBs... the shell game can continue for a little more... dont underestimate them

6:32 AM  
Blogger jmf said...

Moin FG,

the BOJ won´t be alone in monetzing debt......

One of many reason why i love GOLD.....

Will be interersting to see if the YEN will regain the poleposition for the carrytrade.....

This could even be bullish for the Nikkei.... At least if you follow the strange logic of the "hot money" where fundamenatls don´t matter... ;-)

6:45 AM  
Blogger jmf said...

Race to the bottom with G4 currency rhetoric Reuters

7:04 AM  
Blogger francois-guillaume said...

pbs with gold in france:
either you buy paper gold..

or physical transactions
but then there is a 7.5% tax on the NOTIONAL, (not on the profit !!)
very dissuasive...

6:53 AM  
Blogger francois-guillaume said...

This comment has been removed by the author.

6:53 AM  
Blogger jmf said...

Moin FG,

7.5 percent.... plus the spread?

What about taxes on profits....?

7:05 AM  
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