Japanese Bond Market Halted At Open As Bond Selling Purge Goes Global

Japanese government bonds (JGB) futures have been halted once again this evening as the market opens down over 1 point. 10Y yields smash 11.5bps higher to 1.00% and 5Y yields add 6bps to 47bps. These are quite simply unprecedented moves in what ‘was’ a safe asset class and impresses yet another VaR shock on the market (as we detailed here). What this means practically is that Japanese banks push further into insolvency land (as we explained here) today’s move wipes out another 1.5% of blended Tier 1 capital off the entire Japanese banking industry. Since the 10Y JGB yield lows of 32.5 bps on April 5, the move is rapidly approaching a full percentage point, or the parallel shift amount that the IMF warned would lead to 10% and 20% MTM losses for regional and major banks respectively. Today’s jump in 10Y yields continues the post-BoJ regime of greater-than-six-sigma moves… something no risk model can withstand for three weeks. Just a good job the BoJ didn’t have anything at all to say about this totally disorderly fiasco yesterday.

JGB Futures plunge to two-year lows…


leaving yields spiking…


10Y yields have now tripled from the post-BoJ meeting lows (in 7 weeks!!)


JPY is being sold like there’s no tomorrow (which for the Japanese may well be true)


Meanwhile the Nikkei 225 is tearing hiugher once again – now up ovcer 85% from its Oct 2012 lows…


Charts: Bloomberg


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