Thursday, November 17, 2016

JGB Madness

Japan is losing control of it's huge bond market.

They've basically started unlimited bond purchases in the open market to settle yields at policy levels. FYI, this is pretty unprecedented. WSJ and Bloomberg have also reported it. You can't make this shit up.

Observers might think this helps, but I think this just exacerbates the problem and opens the door that leads down the path of more madness.

Maybe I'm just a cynic, but I just don't get or support their Krugman-esque policies. It doesn't make any sense to me.

Can someone please help me understand why this is okay in Japan and how Japanese people view these crazy policies? To me, it just looks like the BOJ is monetizing it's own debt and is on the path to eventual, major currency depreciation.

Perhaps when the SGD/JPY goes to 200 I would be able to fully appreciate what the BOJ has done to enrich me by robbing the Japanese people. I'm planning to start learning Japanese in 2017. Might be useful when I find myself negotiating to buy a nice apartment in Central Tokyo.


  1. It's part of quantitative easing and part of Abenomics, which is actually a good thing. Performing open market purchases increases the domestic assets of the Bank of Japan (central bank) and increases the money supply in the market. This is not unprecedented as the US has done it, and the ECB has done it in their QE as well. The main role is to pump money into the economy, and depreciate the Yen, in order to boost exports.

    Lazy Singaporean

    1. Hi LS,

      I understand QE and open market operations. When the US was doing it, I was monitoring their POMO data and observing the extremely high correlation to stock market pumps on POMO days. Liquidity at its best.

      The unprecedented part is the unlimited nature of the purchases. To me it means that they no longer control the bond market and need this tool to ensure that they retain control.

      It doesn't make sense that they are continuing a policy that hasn't been working and with very bad effects for their future.


Observe the house rules.