Friday, June 21, 2013

JGB Watch: 10 Year Yields Drifts at Near Critical Levels

Back to my frequent JGB-Japan debt crisis watch.

Stable instability has resumed.

The 10 year JGB yield has reached levels which previously sparked an ensuing stock market crash.


Notice that each time JGBs (orange) hit the .89-90+% levels, the Japanese equity benchmark as measured by the Nikkei index (lemon green) took a big hit. Currently the 10 year yield trades at .88-.89%.

It is important to point out that such serve as observations on correlations or patterns whose relationship may change.

Nonetheless 10 year JGB support area seems at the .79-.81+% levels.

Given the sharp spikes in bonds almost everywhere, dismissing a contagion on JGBs would be reckless. My impression is that the ceiling or resistance levels could be tested or breached anytime soon.


Today, the Nikkei rebounded from the opening big losses, which apparently had been a carryover sentiment from the badly beaten US-Euro equity markets, to close on the green.

It remains to be seen if the current global risk asset meltdown will ease or merely pause before another wave of selling occurs.

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