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Japan Government Bonds 10 YR YieldJJ

Japan Government Bonds 10 YR Yield

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JP10Y trade ideas

Japan's government ten-year yield bonds down -31.75%Japan's government ten-year bonds fell last Month 25th of Feb 2020 below -0.089, and it's been trying for the five previous sessions to hold off sellers of pushing prices below a critical support level at around -0.166 and so far it's holding well. Prices fell in its last trading session to the support level but bouched off and closed at -0.147. This support level is crucial as you can see on the price chart that it has formed a price channel to the upside, and it could head back to retest -0.089 if it holds at the current price level. if it fails, then the next support is approximately at -0.221
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by Rotuma
unintended consequence-- rasing caps to buffer Japanese sales talooks like the boj is about to lessen its yield control program to raise more caps for their sales tax hike later this year. why is this important? the yield control program effects the cost of carry on participants when buying and holding yen. positive usdjpy means participants are selling yen vs usd. however, negative usdjpy means participants are buying yen vs usd. since yen purchases are associated with fear. the yield control program has had an indirect effect on equities globally. i dont think the sales tax hike will be successful due to public outrage. that being said. long term business as usual. but til then the japanese sales tax hike will require yen appreciation which will result in equity volatility
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by The_dumpster_diver
Carry trade applications and future questionsThrough massive easing and control of the 10 year the boj has power to control yen buying and selling. Negative yeilds mean negative returns when buying yen so it's more optimal to sell yen vs a stronger currency like usd. Ironically the usdjpy is commonly used as a risk on risk off trigger for equities. So negative carry usdjpy=yen buying hence fear. Positive carry=yen selling. When observing this keep in mind the Japanese 10 year and the psychological factor that a positive and negative yeilds play on yen. Keep in mind Asian markets are closed til next week so expect little to no change in Japan 10 year. Sales tax changes in Japan later this year may cause interesting implications for this trade. Faliure may result in steeper easing. Success may result in less easing. Prolonged easing will result in default longer term.
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by The_dumpster_diver