My Kuroda! Tokyo Welcomes Treasury Investors to ‘World of Japanification’

You can see former Federal Reserve Chairman Ben Bernanke at the Washington Nationals baseball games. He sits behind the Nationals dugout on the first baseline and wears an ill-fitting Nats cap and jaunty shorts. He has made the news by visiting Japan, allegedly to meet with Japan’s Prime Minister Abe and Bank of Japan Governor Haruhiko Kuroda to discuss desperate measures to salvage Japan’ stagnant economy. And probably attend a baseball game as well.
(Bloomberg) – Japan’s biggest bond bulls, seasoned by two decades of economic stagnation, say the plunge in yields below zero in Tokyo foreshadows record-breaking gains for U. S. Treasuries.
Mitsubishi UFJ Kokusai Asset Management says U. S. 10-year yields will drop to 1 percent as soon as this month. Sumitomo Mitsui Trust Asset Management says it’s likely in 2017, and Mizuho Asset Management predicts the figure may go even lower. The yield, a benchmark for everything from U. S. mortgages to dollar bonds in developing nations, plunged to a never-before-seen 1.318 percent last week. A surging jobs report wasn’t enough to derail the rally.
‘Welcome to the world of Japanification,’ said Hideo Shimomura, the 49-year-old chief fund investor at Mitsubishi UFJ Kokusai in Tokyo, which oversees about $119 billion. ‘One percent is inevitable.’

This post was published at Wall Street Examiner by Anthony B. Sanders ‘ July 11, 2016.