Japanese bonds turn negative

Graham_Devon

Which, apparently means that investors are paying to hold government debt.

Is this significant? Apparently it's the first time this has ever happened to a G7 nation.

https://twitter.com/JavierBlas2/status/696968649148669952

mwpt

Investors have been paying to hold Swiss government debt for some time.

purch

The Nikkei dropped over 5% today due to the recent strength of the JPY.

Everyone is buying JPY as it's now considered a "safe haven", which it had better be, seeing as you are expected to pay to hold the currency.

Apparently the word SAFE has a new meaning :eek:

Generali

Graham_Devon wrote: »

Which, apparently means that investors are paying to hold government debt.

Is this significant? Apparently it's the first time this has ever happened to a G7 nation.

https://twitter.com/JavierBlas2/status/696968649148669952

What has happened is that the yield on an imaginary 10 year Japanese Government Bond has gone negative.

Lots of Government bonds have negative yields but a negative yield over ten years is unusual and (possibly) unique. About a third of our fixed income benchmark had a negative yield last time I checked which I admit was a while ago.

purch wrote: »

The Nikkei dropped over 5% today due to the recent strength of the JPY.

Everyone is buying JPY as it's now considered a "safe haven", which it had better be, seeing as you are expected to pay to hold the currency.

Apparently the word SAFE has a new meaning :eek:

Yup. Japan has about a 240% debt:GDP ratio which, IIRC, is a level which has only failed to be defaulted on once: the UK after the Napoleonic Wars.

antrobus

Generali wrote: »

...Yup. Japan has about a 240% debt:GDP ratio which, IIRC, is a level which has only failed to be defaulted on once: the UK after the Napoleonic Wars.

Why had 250% in 1945 as well. We didn't default then either. OK, I grant you, we were bailed out by the Americans, otherwise we probably would have defaulted, so perhaps that doesn't count.

Generali

antrobus wrote: »

Why had 250% in 1945 as well. We didn't default then either. OK, I grant you, we were bailed out by the Americans, otherwise we probably would have defaulted, so perhaps that doesn't count.

The UK defaulted via a forced exchange of bonds on a big chunk of WW2 debt after the end of the war. If you promise to repay an amount of money on a particular date and pay a defined amount of interest in the meantime and fail to do one of those things then you have defaulted. On that definition the UK defaulted on WW2 debt.

[I tried a quick Google but perhaps a more substantial antrobus will turn up a link]

globalds

Generali wrote: »

Yup. Japan has about a 240% debt:GDP ratio which, IIRC, is a level which has only failed to be defaulted on once: the UK after the Napoleonic Wars.

http://www.bloomberg.com/news/articles/2015-05-22/japan-still-beating-china-on-one-score-world-s-no-1-creditor

Japan’s foreign investments and assets climbed to a record in 2014, keeping it in front of China and Germany as the world’s top creditor nation.
The reading stretches Japan’s lead as No.1 creditor country to 24 years, with 71 percent more in net assets than China, even after its Asian neighbour surpassed it to become the world’s second-largest economy in 2010.

So Japan is like someone who has ten buy to lets that have gone up in value but they do have them all on interest only mortgages ?

Japan is the Ferguson's :eek:

Generali

globalds wrote: »

http://www.bloomberg.com/news/articles/2015-05-22/japan-still-beating-china-on-one-score-world-s-no-1-creditor



So Japan is like someone who has ten buy to lets that have gone up in value but they do have them all on interest only mortgages ?

Japan is the Ferguson's :eek:

Not really.

It's like a family where the parents have maxed out the credit card and the kids are dilligent savers.