Yesterday we asked if the stealthy Japanese intention to steepen the JGB yield curve will crash global markets. While a crash, if any, has yet to emerge, overnight we have observed another bond selloffs, particularly at the long end of the curve, which has spilled over into stocks around the world on what Bloomberg dubbed were “signs central banks are starting to question the benefits of further monetary easing.” Oil pared a weekly gain, leading commodities lower.
As predicted yesterday, today longer-maturity bonds bore the brunt of the losses after the European Central Bank on Thursday downplayed the need for more stimulus, sending 30-year German bund yields to the highest since June, while Reuters added that “The Bank of Japan is studying several options to steepen the bond yield curve, say sources familiar with its thinking, as authorities desperately seek out policy tools to revive an economy that has failed to emerge from stagnation despite years of massive stimulus.”
As shown in the chart below, both Japan and German long-term yields are almost back to positive…
This post was published at Zero Hedge on Sep 9, 2016.