Whether front-running or fear-based (or both), the actions of BoJ's Kuroda last week have driven global bond yields into freefall with JPM's global index at 9-month lows and BofA's at 12-month lows. Overnight saw short-end JGBs push below the BoJ's -10bps threshold and 10Y rates push towards NIRP to record lows. German bonds extending their epic voyage into fantasy and hit new record lows across the curve with 5Y at -32bps.
Bond yields across the globe are collapsing...
With Japanese and German bonds now negative to 9 years and 8 years respectively...
“Banks will allocate more money to non-cash-type of investments, and the first priority will be the bond market,” said Hajime Nagata, a bond investor in Tokyo at Diam Co., which oversees $143 billion. “The market is expecting that Japanese investors will allocate more to foreign fixed income.”
As Bloomberg reports,
In the bond market’s view, the chance of a Federal Reserve interest-rate increase this year is practically a toss-up after the Bank of Japan’s surprise policy move.
Derivatives traders see less than 60 percent odds that the Fed will raise its benchmark even once this year, let alone the four quarter-point increases that policy makers projected in December.
Not exactly "buy stocks and increase wealth" confidence-inspiring stuff eh?
Charts: Bloomberg