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........ ;-)

carry trade spreading to japanese households / retail investors

looks like the carry trade don´t need hedge funds and the big player to continue and to inflate.... thanks to the boj for the zero interest rate policy.....

read more about japan and the bank of japan http://nihoncassandra.blogspot.com/

sieht ganz so aus als wenn der carry trade inwzischen sogar den kleinen mann und normalen anleger erreicht hat. ob sich die notenbank bei solch einer entwicklung nicht fragt ob sie was verkehrt gemacht hat. mehr zur boj unter dem o.g. link

The yen was lower against all 16 of the world's most- actively traded currencies over the past month, with the biggest losses versus higher-yielding currencies such as the Australian and New Zealand dollars. Borrowing costs in both countries are 5.75 percentage points and 7 percentage points higher than those in Japan, respectively.


``The yen's downtrend will continue as Japanese, who are fed up with low returns, will continue to export capital,'' Tokyo-based Umemoto said in an interview on April 2. ``Individuals will play the leading role.'' The fastest pace of growth in three years in the quarter ended Dec. 31 gives individuals greater confidence to send money offshore, he said.

Overseas assets held by Japanese households reached 46 trillion yen ($387.2 billion) in 2006, nearly 10 percent of the nation's gross domestic product, but only 3 percent of their total financial holdings, based on Umemoto's own calculations.

Breathing Room
The Japanese currency traded at 118.85 per dollar at 3:04 p.m. in Tokyo from 118.96 late in New York yesterday. The yen is down 0.9 percent this week, the first of the fiscal year that started April 1.


It gained 1 percent last quarter as some investors exited carry trades, where they borrow and sell yen for better returns elsewhere, because of a global slump in stock markets.

``It's likely that there's breathing room for households to shift money from safe but low-return deposits to riskier, higher return assets abroad,'' said Masafumi Yamamoto, a strategist at Nikko Citigroup Ltd. in Tokyo and a former Bank of Japan currency trader. ``The Japanese ratio at 3 percent does not look particularly high.''

Yamamoto is less bearish on the yen than his counterpart at Barclays, predicting the currency will fall to 119 a dollar by June 30. He said Japanese overseas holdings rose 27 percent last year from the previous year, citing data compiled by the Bank of Japan, monthly data from the Investment Trust Association Japan, and Citigroup's own estimates.

Bank Deposits
Japanese mutual funds boosted purchases of assets abroad to about 40 percent of the total from about 8 percent in 2002, according to the Investment Trust Association. The mutual funds now have about $244 billion of assets denominated in foreign currencies, including $98 billion in the U.S. dollar.

The yen weakened 5.9 percent versus the New Zealand dollar and 5.3 percent against Australia's currency in the past month. Australian and New Zealand 10-year government bonds both offer a yield premium, or spread, of 4.20 percentage points over similar-maturity Japanese debt. Securities in Germany give an extra 2.4 points.

>coinicidence / zufall ?

thanks to http://kevinsmarketblog.blogspot.com/index.html

more on the correlation of risk taking and the yen from mike larson http://tinyurl.com/2a5xap

The ratio of Japanese household savings parked in banks and post offices accounted for about half of their total financial assets of 1,550 trillion yen, compared with 10 percent in the U.S. and 30 percent in Europe, Barclays' Umemoto said. That will continue to decrease as more funds go overseas, he said. ....

Japan is seeing a rise in so-called margin trading, where retail investors borrow part of the money necessary to buy currency, seeking to make a profit on price gains.

``The presence of foreign-exchange margin traders is increasing in Tokyo,'' said Kenichiro Yoshida, a senior economist and currency analyst in Tokyo at Mizuho Research Institute, a unit of Japan's second-largest lender by assets. ``Younger generations such as in their 30s are trading currencies even by mobile phone.''

Individual Power
Japanese individuals' foreign currency-denominated assets exceeded 40 trillion yen in 2006, topping such assets held by life insurers, the Nikkei newspaper also reported on March 31, excluding the estimated amount of foreign-currency positions by Japanese foreign-exchange margin traders.

Life insurance companies, commonly known as Seiho in Japanese, used to play a major role in the financial markets of the late 1980s during Japan's asset-inflated bubble economy by purchasing massive amounts of foreign bonds.

``We cannot ignore individual power,'' said Ryohei Muramatsu, manager of Group Treasury Asia at Commerzbank in Tokyo. ``Japanese individuals account for about 20 percent to 30 percent of foreign-exchange margin trading in the Tokyo time zone. Institutional investors will lag behind households.''

> should be no suprise that gold is speaking loud and clear

>gold in yen spricht hier ne eindeutige sprache......

........to be continued......

gold vs usd, yen, gbp, chf, eur / ty andros

thanks to Ty Andros / safe haven.

please click on the headline to read much much more.

wie gewohnt bitte auf die überschrift klicken um mehr zu lesen.

This is the picture of the theft of your savings, it is also a powerful chart showing the first leg up in a bull market in gold, a corrective period in terms of time and price and finally signaling the next leg up in gold has begun. This is a competitive devaluation raceway, as the major economies in the world work towards protecting their local industries by making them currencies cheaper in relation to each other


größer/bigger http://www.safehaven.com/images/tedbit/7079_a.gif

bank of japan + savings rate

the boj has lost a lot of credibility. on the one hand they want to stop the addiction of cheap money, they want to end the carry trade, they want to implement a forward looking policy, and they have adopted the "core" rate excluding food.....(they are really serious about their inflation fighting mission....) etc.......

die bank of japan (boj) hat meiner meinung nach fast all ihre glaubwürdigkeit verloren. auf der einen seite will sie japans "sucht" nach billigem geld unterbinden, dann wollen sie den carry trade beenden, dann eine vorausschauende zinspolitik implementieren, dann haben sie in schöner us manier mal eben die "kern" rate adoptiert ( man sieht wie ernst es mit der inflationsbekämpfung ist.....

thanks to barry ritholtz http://bigpicture.typepad.com/

the full article (headline) gets to the usual carry trade ( better sources at the label) and deflation issue. i want to focus on the savings rate. this number is really surprising.

der ganze artikel (überschrift klicken) geht auf die üblichen sachen wie carry trade ein. empfehle dazu eher unter dem label zu lesen. ich finde die sparrate am interessantesten. und die ist in der tat ne echte überraschung!

.....The BoJ has been held back until now by the choppy state of the Japanese economy. After a particularly bleak third quarter, when it eked out annualised growth of just 0.3%, the fourth-quarter numbers announced last week came as welcome relief. For the three months to December, the economy grew at an annual rate of 4.8%, its fastest pace in three years. Much of the gain was thanks to stronger personal spending, which was up by an annualised 1.1%. This was mainly a rebound from the previous quarter, when spending fell by much the same amount. ......

The bank is counting on consumption, which accounts for 55% of Japanese GDP, to become the locomotive of the economy. Households are certainly spending what they have. According to the OECD, Japan's household saving rate has fallen by over eight percentage points since 1998, a deeper plunge than America's. The country's households now fail to dispose of just 2.9% of their disposable income.........(wow!!)

at least they have not an official "strong yen policy"............. like the us :-)


here is one example of how widespread the carry trade is (thanks to russ winter )http://wallstreetexaminer.com/blogs/winter/?p=451#comments

Last year, the surge of short-term external debt was engineered by South Korea’s commercial banks, which were anxious to increase profits by borrowing yen to expand domestic household credit. In many instances, Koreans used very low-interest yen credit offered by South Korea’s commercial banks to finance speculative mortgages in the country’s real-estate market. This has left Korean households with large unhedged exposure to the Japanese yen and South Korean banks facing the prospect of widespread mortgage default in the event of the yen’s reversal. South Korea’s commercial banks also have enormous unhedged exposure to the yen through massive carry trades on their own balance sheets.”

got gold.....? / minyanville

that's the logic when a central bank keeps the rate close to zero to fight deflation.........click on the headline to see more very good charts

so soeht es aus wenn ne zentralbank die zinsen nahe 0% hält um ne deflation zu bekämpfen.....bitte auf die überschrift für weitere charts clicken

relative to the Japanese Yen, the price of Gold has already forged a new multi-year bull market high, evident in the weekly chart on display below. In fact, since the beginning of the latest bull phase in Yen-Gold, from late 200, the price has tripled