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Business Recorder
a day ago
- Business
- Business Recorder
JGBs rise on safe-haven bets as Israel strikes Iran
TOKYO: Japanese government bonds (JGBs) rose on Friday as investors bought safe-haven assets after Israel said it attacked Iranian nuclear targets, stoking geopolitical worries. The 10-year JGB yield fell to as low as 1.385%, its lowest since May 12. It was last at 1.41%, 4.5 basis points (bps) lower than on Thursday. Yields move inversely to prices. Super-long JGB yields rise after weak auction, reversing earlier declines 'The yields fell sharply after the news about Israel's attack,' said Miki Den, a senior Japan rate strategist at SMBC Nikko Securities. Early on the day, Israel said it had struck Iranian nuclear targets to prevent Tehran from developing atomic weapons, with Iranian media and witnesses reporting explosions, including at the country's main uranium enrichment facility. The demand for safe-haven assets was a tailwind for super-long JGBs, which have struggled to attract investors at a series of auctions in the past few weeks. The 20-year JGB yield fell 3.5 bps to 2.36%. On Thursday, the outcome of the finance ministry's liquidity enhancement auction for bonds with maturities between 15.5 and 39 years worsened from a similar auction in April. But Japanese Government Bond, which has a maturity of 35 years, and with a maturity of nearly 30 years, were among the few tenors that got the highest bids, the finance ministry said. SMBC Nikko's Den said there was a demand from investors to cover short positions of super-long bonds. 'They made short positions on those bonds, but then wanted to buy them back after seeing news that signalled the finance ministry's willingness to improve demand,' said Den. The yields on super-long bonds hit record highs in May but were on the decline after Reuters reported last month that Japan's finance ministry was considering reducing their sale.
Yahoo
02-06-2025
- Business
- Yahoo
Bitcoin, Bonds, and the Rising Influence of Japan's Yield Curve
Weston Nakamura founder of Across The Spread, a global markets analyst known for his macro insights through an Asia lens, highlights a surprising and increasingly critical macro relationship. According to Nakamura, Bitcoin BTC appears to be tracking long-end Japanese Government Bond (JGB) yields specifically the 30-year more closely than its traditional correlation with U.S. equities like the Nasdaq 100. As BTC's price diverges from risk assets, its movements have begun aligning with surging JGB yields, both reaching record highs in recent months. Nakamura notes key moments in 2024 such as the launch of U.S.-listed spot BTC ETFs and Trump's re-election where BTC experienced brief, narrative-driven price bursts, only to eventually revert to a path consistent with long-end JGB yield movements. He argues this alignment is not simply a second-order effect of U.S. Treasury (UST) yields but a direct consequence of Japan's unique market dynamics. Reinforcing this view, Nakamura references a recent clip of U.S. Treasury official Scott Bessent, who asserts that UST yields are not being driven by domestic political dysfunction, but by global forces explicitly citing Japan. This raises the provocative idea that if U.S. policy is being shaped around the 10Y Treasury yield, and that yield is in turn being influenced by Japanese bond markets, then Japan may be indirectly guiding U.S. macro policy. Nakamura suggests JGBs are now at the center of the global financial system, influencing everything from crypto to equities, FX, and gold. In the meantime, he urges investors regardless of asset class to watch Japan closely, as its long-overlooked bond market could be exerting outsized influence on cross-asset behavior worldwide. Sign in to access your portfolio
Yahoo
10-03-2025
- Business
- Yahoo
Bitcoin Traders Now Target $70K as Japan Bond Yields Surges to 17-Year Highs
Crypto bulls may need to brace for some turbulence as Japan's 20-year government bond yield surged to its highest level since 2008 in a move that has historically led to aversion from risk assets such as bitcoin (BTC). The Japanese Government Bond (JGB) yield climbed to 2.265% last week, a level not seen since the global financial crisis, amid speculation of potential rate hikes by the Bank of Japan (BOJ) and rising inflationary pressures. These are similar conditions to August 2024, where strength in the yen saw a global sell-off from equities to bitcoin, as CoinDesk reported at the time. A surge in Japanese bond yields, coupled with geopolitical and economic uncertainties, is fueling concerns among traders that BTC could face a significant correction. Higher yields indicate that the Bank of Japan may raise interest rates to control inflation or manage its large public debt. Rising yields in Japan often signal broader global economic uncertainty or tighter financial conditions. This creates a stronger yen, which can reduce the appeal of carry trades, where investors borrow in yen to invest in higher-yielding assets like BTC. As such, traders are targeting a low of $70,000 for bitcoin in the coming weeks amid macroeconomic jitters, an ongoing tariff trade war and the general lack of market catalysts after a run-up to the U.S. presidential elections. 'We believe that the geopolitical and economic uncertainty is causing institutions to pare down their crypto holdings, and Bitcoin could very well drop to the $70-80k range in the coming weeks,' Jeff Mei, Chief Operating Officer at BTSE, said in a Telegram message to CoinDesk. 'Only when this tariff war ends and the Fed resumes cutting rates will top cryptocurrencies resume trending towards previous all-time highs,' Mei added, reflecting growing apprehension about the impact of U.S. trade policies nd the Federal Reserve's cautious stance on interest rate cuts in 2025. Elsewhere, Augustine Fan, Head of Insights at SignalPlus, painted a grim technical picture: 'Price action has turned technically very negative, and the high realized volatility has worsened the BTC risk-adjusted profile, with few (if any) immediate positive catalysts on the horizon.' Fan's comments align with a CoinDesk analysis on Sunday, which noted that BTC is testing the 200-day simple moving average (SMA) and a close below it could mean a critical break in a strong support trendline.
Zawya
25-02-2025
- Business
- Zawya
Get real, BOJ rates are deeply negative: McGeever
(The opinions expressed here are those of the author, a columnist for Reuters.) ORLANDO, Florida - Although the Bank of Japan is raising borrowing costs and Japanese Government Bond yields are the highest in 15 years, "real" inflation-adjusted rates in the world's fourth-largest economy are actually negative and the lowest in years. Given how much has been written about the BOJ's 'historic' rate-hiking campaign and the recent spike in JGB yields, one might think policy conditions in Japan are tightening. But that's not the case. The real official policy rate in Japan is currently -3.5%, the lowest in two years. That's because annual consumer price inflation in Japan is now 4%, higher than in the United States, euro zone and UK. This accelerating inflation – something of a novelty in Japan – indicates that financial conditions in the country are still extremely loose, despite the apparent hawkish shift in monetary policy over the past year. This discrepancy could have significant implications for Japanese - and global - markets. OUTLIER The BoJ is the notable outlier among G10 central banks as the only one raising rates, even if it is taking an understandably cautious approach after decades of deflation and extraordinarily loose policy. The market has, in turn, developed a persuasive narrative: the BOJ swimming against the global tide will lift JGB yields, attract domestic and foreign capital, and turbocharge the yen. Given that Japan is the world's largest creditor nation with a net $3.3 trillion of assets held overseas, the yen's upside is potentially huge. Some of this story is playing out. The yen is up more than 5% against the dollar this year, making it the best-performing G10 currency. But as Bank of America analysts neatly point out, real yields and rates complicate the picture. REALITY CHECK Last week, BofA raised its year-end forecast for the 10-year JGB yield to 1.65% from 1.40% and lifted its BOJ terminal rate forecast to 1.5% from 1.0%. The BOJ's policy rate is currently 0.5%, the highest since the Global Financial Crisis. Yet the BofA analysts also expect to see the yen fall to 165.00 per dollar by the end of this year, which would be the weakest level in almost 40 years. That's because real interest rates matter to investors and businesses. Yen deposits have lost their real value at an annualized rate of 3.6% over the past three years, they argue. And Japan's real policy rate is currently a full 500 basis points lower than the equivalent U.S. rate, and 530 bps below the equivalent euro zone rate. Even if Japan's inflation halves to 2% and the policy rate doubles to 1%, the real policy rate would be -1%, still well below equivalent U.S., UK and euro zone real rates, which are all positive. So Japanese households may be tempted to seek higher returns overseas. For domestic real rates to become attractive, the BOJ would need to tighten policy sharply or inflation would need to start slowing soon. Or both. Given the BoJ's caution and the stickiness of inflation, that's a real tall order. (The opinions expressed here are those of the author, a columnist for Reuters.) (By Jamie McGeever; Editing by Kirsten Donovan)
Reuters
17-02-2025
- Business
- Reuters
ASIA RBA poised, China tech booms, Japan GDP sizzles
Feb 18 (Reuters) - A look at the day ahead in Asian markets. There's no shortage of market-moving news in Asia on Tuesday, with an Australian interest rate decision, China's tech boom and sizzling Japanese GDP figures front and center for investors, against a backdrop of unfolding geopolitical drama around U.S.-Europe relations and the Russia-Ukraine war. On the economic front, the main event locally will be the Reserve Bank of Australia's expected quarter-point cut to its cash rate to 4.10%, its first reduction in over four years. Easing inflation has opened the door for a rate-cutting cycle, but only a shallow one - money markets are pricing in only 50 basis points of additional easing this year after Tuesday's move. If the RBA does lower rates on Tuesday, it will be one of the last G10 central banks to do so. Norway's central bank hasn't started easing yet, while the Bank of Japan is raising rates. That cycle could accelerate, after figures on Monday showed Japan's economy grew at an annualized 2.8% pace in the October-December quarter, nearly three times faster than the consensus 1.0% in a Reuters poll. The highest forecast in the survey of 17 economists was 2.2%. The yen and Japanese Government Bond yields are on the rise. Recent inflation and wage growth data have also surprised to the upside, but the Bank of Japan will be cautious about raising rates after decades of deflation and ultra-loose policy. Two-year and 10-year JGB yields are already the highest since 2008 and have risen sharply in recent months, roughly doubling since September. These are big moves, and the impact on businesses, households and investors remains to be seen. The rebound in Chinese markets continues, meanwhile, with tech shares listed in Hong Kong hitting a three-year high on Monday as President Xi Jinping sat down with top tech leaders in Beijing. The Hang Seng tech index is up more than 30% in a month. The symbolism of Xi's rare meeting with tech leaders is powerful, reflecting policymakers' worries over the economy and China's technological development, and marks a sharp turnaround from the regulatory clampdown on tech four years ago. Shares in Baidu plunged on Monday, however, wiping $2.4 billion off its market value after the search engine giant's founder was not spotted at the meeting. These market moves, in their own ways seismic in nature, come against truly seismic geopolitical developments around America's ties with Europe and President Donald Trump's role in brokering a truce between Ukraine and Russia with Russian President Vladimir Putin. A peace deal - even a 'dirty deal that clearly favors Russia', in the words of Danske Bank - may boost risk appetite, and weigh on the dollar and oil in the short term. But the wider implications of a fracturing of 80 years of solid U.S.-European relations since World War Two could raise risk premia across markets in the long term. Here are key developments that could provide more direction to Asian markets on Tuesday: - Australian interest rate decision - Singapore budget (fiscal year 2025) - Hong Kong unemployment (January) Get a look at the day ahead in Asian and global markets with the Morning Bid Asia newsletter. Sign up here. By Jamie McGeever Our Standards: The Thomson Reuters Trust Principles., opens new tab
