Breakingviews - Japanese bond market shift spells stronger yen

Yields on Japanese bonds maturing between two and four decades from now have risen to their highest level in a year without provoking any obvious pushback from Kuroda. Big investors like pension funds and life insurers get hurt when long-dated bond yields fall and offer a declining premium over shorter-term debt. The central bank may therefore be pleased that the exact reverse has happened this year in Japan, host to a vast population of pensioners.

But Kuroda isn’t operating in a vacuum. As longer-dated yields in Japan were rising, those in many other developed countries fell. As a result, since January, Japanese investors have seen the premium they received from buying U.S. Treasuries over domestic bonds steadily shrink. In some cases, Mrs. Watanabe would now be better off keeping her money at home: most of the French government bond yield curve has fallen below Japan’s.

Granted, there are developed countries where yields are still higher, including Italy and Spain. But those returns reflect genuinely higher risks, and Japanese investors who enjoyed the safe waters of the French bond market may steer clear. Add the cost of hedging foreign-exchange exposure, and the charms of overseas assets may fade in Japan even as foreign funds warm to trading Japanese fixed income.

The less inclined Japanese investors are to invest abroad, the less foreign currency they will need to buy, and the more buoyant the yen will become. After a short-lived bout of appreciation in March, the Japanese currency has remained relatively stable - a relief to exporters grappling with a global slump in demand. The last thing they need now is a currency rally. To preempt that threat, Kuroda may need to take a fresh look at the whole length of Japan’s yield curve.

Breakingviews swahapattanaik

Belgique Dernières Nouvelles, Belgique Actualités

Similar News:Vous pouvez également lire des articles d'actualité similaires à celui-ci que nous avons collectés auprès d'autres sources d'information.

Japanese bond market shift spells stronger yenCentral bank boss Haruhiko Kuroda has kept yields on 10-year debt near zero but let those on longer-dated ones rise. Now most of Japan’s yield curve is above that of France. Dwindling returns on overseas bonds could reduce local demand for foreign currency, sparking a yen rally.
La source: Breakingviews - 🏆 470. / 51 Lire la suite »

Coronavirus Is No Cure for Health-Care StocksMuch of the allure of health-care stocks has worn off. “Contrary to what many would believe, Covid-19 is not a net positive for the sector. It is simply less negative than it is for many sectors.' Market analysts betting that the shares of health care companies won't lead the way. Dr. D.Samadi drdavidsamadi Let’s be clear. The media lied to us about Hydroxychloroquine simply because the President believed in it. Had the media not scared doctors off from using the treatment, we would largely be passed the pandemic, the death numbers would be very different 'survey ..of ..200 fund managers showed that they view a Democratic 2020 sweep.. as third-biggest risk.. , following a second wave of coronavirus and permanently high employment [sic🤣].' The correct propaganda term is *unemployment*.
La source: WSJ - 🏆 98. / 63 Lire la suite »

Dollar in narrow range, yen falls as stocks riseThe dollar held steady against most currencies on Monday as investors awaited data expected to show the U.S. services sector stopped contracting, in what would give further hope to an economic recovery from the coronavirus pandemic.
La source: Reuters - 🏆 2. / 97 Lire la suite »