CHART OF THE DAY: The Japanese Bond Selloff That Everyone Is Talking About

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The most interesting moves over the last few days have been in the Japanese Government Bond Market, where yields have been jumping.

There’s one camp that would argue that this is the natural result of stimulus and an increase in inflation expectations.

Another camp argues that this is the beginning of a much more disorderly collapse in the market, that threatens Japan’s sovereign finances.

Here’s an interesting nugget from Nomura:

This marks the sharpest three-day steepening in super-long zone since April 1995; the correction may continue into the auction, leaving 30s at attractive levels to buy outright.

Anyway, via Nomura, here’s a chart of 30-year Japanese government bond yields.

As you can see, borrowing costs are the long end are super low, and well below where they were just at the beginning of the year.

But thanks to the timing of the BOJ monetary easing last week, the jump is getting some attention.


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