Japanese government bonds and/or the Yen look like they may be the first to fall.

by CommodityMoney

This will have a near-instantaneous effect on other sovereign markets. Time is almost up to buy PMs, IMO. Bianco Twitter link in comments.

2/7

As this chart shows, the Bank of Japan (BoJ) has been operating with yield curve control since September 2016.

The current iteration is targeting the 10-year JGB yield at 0% with a 25-basis point band/range (gray shade).

The blue line is the actual 10-year JGB yield. pic.twitter.com/qXkF7xA2ys

— Jim Bianco (@biancoresearch) April 19, 2022

4/7

But this JGB intervention is coming with a high cost.

The Japanese Yen has been collapsing (a rising line on the chart below). See the orange box.

This is one of the biggest one month moves ever in the Yen. A complete surprise to most. pic.twitter.com/0hPPQ5QqzW

— Jim Bianco (@biancoresearch) April 19, 2022

6/7

Japan owns more US Treasuries than any other country, even China (chart below).

To continue buying US Treasuries takes more and more Yen, because their currency is weakening against the $$$.

They don't have it, so 10-year go vertical with the weakening Yen (chart above). pic.twitter.com/EF3IWVxLiE

— Jim Bianco (@biancoresearch) April 19, 2022

Bonus …

Many economists (incl Lael Brainard) matter of factly promote yield curve control as a legitimate policy tool.

The problem is it works until it blows up. This is what happened to Australia's YCC last year, it blew up … badly

Is YCC now "blowing up" in Japan? pic.twitter.com/uCeEs7tHZ1

— Jim Bianco (@biancoresearch) April 19, 2022

Heads up:
🇯🇵BOJ just announced Fixed Rate Ops offering to buy unlimited JGB 10s at 0.25% for THE NEXT 4 CONSECUTIVE TRADING DAYS (again)

This caps JGBs until 2 days left till start of 🇯🇵Golden Week holiday (JGBs don’t trade for a week), if they don’t extend it https://t.co/H5IakVnGfe pic.twitter.com/BcoHUbGOds

— Weston Nakamura (@acrossthespread) April 20, 2022

Japanese households are getting hit by a weak yen and costlier imports https://t.co/EasXN2AwdF

— Bloomberg Markets (@markets) April 20, 2022