Displaying items by tag: BOJ

(Tokyo)

The Fed is once again shaking the financial world as tapering signals are trickling in…see the full story on our partner Magnifi’s site

(New York)

Investors seem to have every reason to worry about bonds. Prices are high, yields are low, and low quality companies are accessing easy financing even in the face of an uncertain economic future. With all that said, there might not be any reason to worry at all. Central banks are still gaming the system. From the Fed being really conservative with rates, to the ECB and BOJ doing massive QE, the whole central bank mechanism is conspiring to prop up bond prices in a major way.

FINSUM: As long as that pre-condition of huge central bank support is in place, it is hard to see bonds taking much of a hit.

(New York)

They had been paused for a couple of months, but in the last week, things started to change. Treasury yields once again broke above the 3% barrier last Wednesday. The number is a psychologically important and has proved a stalwart level for the yield to breakthrough. It did so earlier this year, before quickly falling back into the 2.8% range. Yields seemed to be pushed higher by a sharp rise in Japanese bonds yields following action by the BOJ.

FINSUM: Treasury yields are hard to handle right now. On the one hand, the economy looks fantastic, which should send them higher, but at the same time the Fed looks hawkish and the risk of recession seems to be rising, which would keep things in check.

(Tokyo)

Bond yields had been rising quickly in the US. The rise seemed to come out of nowhere for American investors, but most analysts said the quick jump in ten-year yields was due to a possible policy change by the BOJ to a less accommodative stance. However, the BOJ announced today that it would make only very minor changes and would remain highly loose in its monetary approach. The bank said it would not join other global central bank’s in tightening policy, and would leave rates ultra low for an extended period.

FINSUM: This is good news for bond investors, as Japanese tightening was interpreted as a major threat. This should help keep US yields looking attractive versus global yields, which will in turn keep them lower.