Concerns about Japan’s possible ‘var shock’-inducing reverse twist policy has sparked selling across global sovereign bond markets. Both Japanese 10Y and German 10Y yields have surged to 0% overnight.
Japanese 10Y yields have not been this high since March….
And German Bund yields have reached 0% for the first time in 2 months…
*GERMAN 10-YEAR YIELD TURNS POSITIVE, FIRST TIME SINCE JULY 22
So will the BOJ shock markets and unleash this year’s “bond tantrum”,
one which would come at a time when there is an unprecedented $13
trillion in negative yielding bonds? According to Old Mutual Global
Investors which oversees the equivalent of about $436 billion, a policy
change aimed at steepening the yield curve wouldn’t be surprising, even though it would come at the expense of bondholders.
“It would definitely see some pain,” said Mark Nash, head of global bonds at the London-based fund manager. “Money flows across borders. It’s all linked.”
And it appears that pain is beginning.
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