JGB Watch: Yields Retreat, the Nikkei Nosedives (by 3.83%) Again

Back to my JGB-Japan debt crisis watch.

Except for the 30 year maturity, the 10 year JGBs retreated today after a failed attempt to reach the critical threshold level, or the .9% line in the sand, where Japanese stock markets in the past weeks collapsed.

Today’s pushback in the 10 year coupon has also been reflected on the 2 and 5 year yields as of this writing.

Curiously, Japan’s equity benchmark, the Nikkei, nosedived even when such threshold had not been touched. 

Today’s crash basically eviscerated yesterday’s 2% gain.

The intraday plunge had been astounding. The Nikkei was mostly choppy for half of today’s session, surged during midday for a very short while, and just melted down after.

Media attributes this collapse to a supposed failed expectations from today’s speech by Japan’s PM Shinzo  From Reuters:

Japan's Nikkei share average plunged 3.8 percent to a two-month low on Wednesday after Prime Minister Shinzo Abe's growth strategy to revive the world's third-largest economy failed to impress investors.

The implication is that the stock market seems to be looking for MORE “stimulus” from Abenomics despite the tumultuous state of Japan's bond markets.

Or what the above scenario suggest is that if Abe-Kuroda provides more stimulus that alleviates the plight of her stock markets, the bond markets will become unsettled. On the other hand, leaving Abenomics at its current form, the stock markets convulses but the bond markets steadies. Damned if you do, damned if you don't.

As I said last Sunday, there seems no way out for Japanese government and the BoJ.

Abenomics has set in motion a trap of their own making and is doomed to fail.