Perhaps some will be surprised by the fact that Japanese yields ended lower today, despite the downgrade from S&P.
It actually makes total sense. The market recognises that the notion of Japan defaulting is nonsense on stilts. The country isn’t going to run out of its own currency.
But if you look into what S&P said, they’re saying that the economy is going to keep sucking wind for a long time.
The deflationary vortex shall continue. So: keep buying JGBs.
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