Despite the eagerness of Abenomics and the new BOJ head Kuroda to have
their cake and eat it too, in this case manifesting in soaring stock
prices, plunging Yen, rising GDP and exports, and most importantly, flat
or declining bond yields, so far they have succeeded in carrying out
three of the four (assuming Japanese economic data reporting is more
accurate than that of its neighbor China), as it is physically
impossible for any central planner to completely overrule the laws of
math, economics and physics indefinitely. In this vein, we have
described on numerous occasions in the past several days the
shock to the system that the massive one-way transfer out of all asset
classes and into equities has engendered, and resulted in several JGB
futures trading halts in an attempt to normalize a market where bond
volatility has suddenly exploded. Volatility aside (and it shouldn't be
as the below section from JPM explains), the recent surge in yields
higher is finally starting to take its tool on domestic bond issuers. As
Bloomberg reports, already two names have pulled deals from the jittery
bond market due to "soaring" borrowing costs. The first is Toyota Industries which as NHK reported, canceled the sale of JPY20 billion debt.
Toyota is among Japanese firms that put off selling debt as long-term
yields on government debt have risen, increasing borrowing costs, public
broadcaster NHK says without citing anyone. Last week JFE Holdings
announced it would delay plans to sell bonds due to market volatility.
Two names down... and the 10 Year is not even north of 1%. (more)
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