BOJ Unveils New Framework for Policy: Statement Highlights / BLOOMBERG

  1. The short-term policy rate will be kept at minus 0,1%.
  2. BOJ will direct its government bonds purchase so that the 10 year yields will remain around current level of 0%. Average maturity rule is cancelled so they can buy along the curve . Pace of buying remains the same i.e. 80 trillion yen per year.
  3. BOJ goes on with their equity market support : they will buy ETF’s at a pace of around 6 trillion yen per year

Virt Pf : In order to broaden our diversification and given the continuation of Equity markets by BOJ we add a Japan ETF quoted in NY . We will use one which includes a JPY currency hedge which is the iShares Currency Hedge Japan ETF (Ticker : HEWJ)- chart below – . Buy at ny open today Max 24,75 USD.

http://www.bloomberg.com/news/articles/2016-09-21/boj-unveils-new-framework-for-policy-highlights-from-statement

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The One Question That Clients Aren’t Asking Reveals Complacency in the Bond Market : What interest rate risk? / Bloomberg

No, interest rates will not stay that low for ever : the dream bond investors have lived for years will turn into a nightmare if they are not prepared.

“Year-to-date, total returns in every area of the fixed income market are strong, really positive, whether it’s Treasuries, whether it’s high yield, whether it’s preferreds, emerging markets, everything’s done great,” … “That doesn’t normally happen. You don’t normally have long Treasuries producing double digit returns and high yield at the same time.”

http://www.bloomberg.com/news/articles/2016-09-13/the-one-question-that-clients-aren-t-asking-reveals-complacency-in-the-bond-market

Yield Hunters Become the Hunted as Japan Long Debt Loses 9% / Bloomberg

  • 20 Years JGBs have lost around 9% this quarter ; Yield is at 0,45% up from minus 0,005 % record low in July. (10Y JGBs shown on chart below)
  • “The intensity of Japan’s bond selloff has sparked concern the market will become the epicenter for a global rout, just as it led a record rally in the first half of 2016.”

http://www.bloomberg.com/news/articles/2016-09-12/yield-hunters-become-the-hunted-as-japan-s-longest-debt-loses-9

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