The aftermath of the latest Bank of Japan monetary policy moves continues to create interesting ripples in the market.
Of particular interest is the action going on in the JGB (Japanese Government Bond) market for two reasons.
One is that JGBs have been on a historic multi-decade rally and are thus known as the “widowmaker” for how many traders have been taken out in a box trying to short them.
The other bigger area of concern is that because Japan has so much debt, people worry about a crisis.
Folks like Kyle Bass is both betting that the widowmaker will end and that Japan will go into a sovereign debt crisis.
JGBs had a volatile day on Friday, as yields jumped markedly and the market had to be halted twice.
And they had a wild day last night as yell, with yields jumping from 0.52% to 0.58% on the 10-year.
And the 5-year was even more notable.
Japanese 5-yr yields +8bps today. Doesn’t sound a lot, but it’s the biggest rise in more than 4 years, since 9 Oct 2008.
— Jamie McGeever (@ReutersJamie) April 10, 2013
We’re still talking minuscule numbers, and it’s below what Japan was borrowing at a couple of weeks ago.
But the jumpiness combined with the new BOJ actions is certainly making folks take notice.