The amount of Japanese government bonds in the market offering negative yields has doubled this year to more than 600 trillion yen ($5.3 trillion) and that’s a major headache for the finance industry.
After the Bank of Japan’s surprise decision on Jan. 29 to implement negative interest rates on some deposits, almost three-quarters of total JGBs would offer no returns or even burn a hole in balance sheets if bought now. The government got paid to borrow 2.2 trillion yen for a decade for the first time at an auction last week, and set a record-low 0.8 percent coupon for an auction of about 800 billion yen of 30-year securities Tuesday.
This post was published at David Stockmans Contra Corner on March 8, 2016.
Recent Comments