While it’s done little for its stock market nor the Japanese yen, the Bank of Japan’s (BOJ)
Today, for the first time ever, the benchmark 10-year JGB yield has fallen below zero, joining other shorted dated Japanese governments in the illustrious sub-zero yielding club.
Before the Bank of Japan stunned markets back on January 29, adopting a negative interest rate policy similar to those already in place across the Eurozone and Europe, 10-year government bonds offered the now-attractive yield of 0.22%.
The stunning chart below, unprecedented for an individual economy as large as Japan, shows the movements in the benchmark 10-year yield over the past 12 months.
This afternoon, Bloomberg’s Michael McDonough tweeted this astonishing, and somewhat historic, chart of Japanese 10-year bond yields, going back to 1995:
Japan 10Y yield (since 1995) pic.twitter.com/QGURJX9xxU
— Michael McDonough (@M_McDonough) February 9, 2016
While the BOJ shock decision has contributed to the sharp decline in yields, concerns over the outlook for the global economy – something that is in part due to the growing belief that ultra-easy money policy settings from the likes of the BOJ and ECB are doing little to boost economic activity – has also been a major factor behind the rush into JGBs, no matter what the price.
Demonstrating this point, it’s been a bloodbath in Japanese stocks today, weighed down by the double-whammy of heightened global growth concerns and a sharp appreciation in the Japanese yen.
Midway through the session the benchmark Nikkei 225 sits at 16290.7, nursing a hefty loss of 4.2%.
The Japanese yen is also strengthening, rising by a further 0.55% to 115.21 against the US dollar. Despite divergent monetary policy movements by the US Federal Reserve and BOJ, the yen hasn’t been this strong since November 2014.