Wednesday, April 08, 2015

Retirement Colony

“The most ironic part about this story is that shifting assets out of JGBs and into Japanese equities may actually be the best risk management play on the planet because as we’ve seen on any number of occasions lately, the BOJ has basically broken the market for government bonds by creating just about the most illiquid conditions imaginable (it turns out when you buy all of something, supply is affected) while it simultaneously intervenes to buy stocks any time the market opens lower, effectively underwriting a furious equity market rally. So to summarize, the BOJ’s move to commandeer the bond market is driving pension funds into the equity market which the BOJ is also keen on owning and in the new (para)normal, the country’s politicians are explicitly encouraging this and thanks to the fact that the bond market is broken, it might actually make some measure of sense.”


Putting Japan’s Retirement Colony At Risk——- BOJ Is Destroying The Japanese Stock And Bond Market


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