Kishida vs Ueda is getting real and has implications for worlds bond markets/Other good stuff
While Japanese markets were closed overnight I'm going to start today talking about a growing political problem now being seen in response to the rising cost of living that the Japanese citizenry is dealing with and the Bank of Japan is still loathe to combat. Who will be the fall guy? Will this lead to a quicker end to negative rate policy and if so, are longer term interest rates going to continue higher? On the latter, I'll still argue yes.
Bloomberg News is citing a poll that was taken by Asahi newspaper that revealed that "More than three quarters of Japanese voters are unhappy with PM Fumio Kishida's handling of price rises...About 77% of respondents to the survey carried out Sept. 16-17 said they didn't rate his price policies positively, compared with 17% who said they did." This highlights the bizarre situation where the BoJ has wanted higher inflation for so long, now finally has it but its increases are exceeding wage growth, the Japanese people are now worse off and Kishida has responded with giving out subsidies to cover gasoline, electricity and household gas. So one arm of government continues to stoke inflation while the other is trying to mitigate its impact. I have to believe the pressure on BoJ Governor Ueda is only going to intensify from here as Kishida won't want to be the fall guy.
Again, Japanese markets are closed but the yen is slightly up, other Asian bond markets sold off which carried over to European bonds and why the US 10 yr yield is kissing 4.35% which on a closing basis would be the highest since November 2007.
10 yr US Yield
To highlight the pain that duration has wrought on holders of longer dated US Treasuries, TLT the 20+ yr maturity US Treasury ETF is down 46% since its peak in August 2020 not including the coupon's collected which if included likely takes the full loss to the high 30's percentage wise.
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