Japanese Bonds Halted Again! This could be the trigger.

[mamboni]

Japanese Bond Market Halted At Open As Bond Selling Purge Goes Global


http://www.zerohedge.com/sites/default/files/pictures/picture-5.jpg (http://gold-silver.us/users/tyler-durden)
Submitted by Tyler Durden (http://gold-silver.us/users/tyler-durden) on 05/22/2013 20:18 -0400





Japanese government bonds (JGB) futures have been halted once again this evening as the market opens down over 1 point. 10Y yields smash 11.5bps higher to 1.00% and 5Y yields add 6bps to 47bps. These are quite simply unprecedented moves in what 'was' a safe asset class and impresses yet another VaR shock on the market (as we detailed here (http://www.zerohedge.com/news/2013-05-19/toyota-pulls-bond-deal-due-soaring-yields-japanese-var-shock-feedback-loop-back)). What this means practically is that Japanese banks push further into insolvency land (as we explained here (http://www.zerohedge.com/news/2013-05-13/jgb-futures-halted-again-biggest-2-day-plunge-lehman-5y-yields-hit-13-month-highs)) today's move wipes out another 1.5% of blended Tier 1 capital off the entire Japanese banking industry. Since the 10Y JGB yield lows of 32.5 bps on April 5, the move is rapidly approaching a full percentage point, or the parallel shift amount that the IMF warned (http://www.imf.org/external/pubs/ft/scr/2012/cr12210.pdf)would lead to 10% and 20% MTM losses for regional and major banks respectively. Today's jump in 10Y yields continues the post-BoJ regime of greater-than-six-sigma moves... something no risk model can withstand for three weeks. Just a good job the BoJ didn't have anything at all to say about this totally disorderly fiasco yesterday (http://www.zerohedge.com/news/2013-05-21/boj-ignores-worst-april-trade-deficit-ever-suggests-economy-has-started-picking).
JGB Futures plunge to two-year lows...


http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2013/05/20130522_JGB1_0.jpg (http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2013/05/20130522_JGB1.jpg)
leaving yields spiking...
http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2013/05/20130522_JGB_0.jpg (http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2013/05/20130522_JGB.jpg)
10Y yields have now tripled from the post-BoJ meeting lows (in 7 weeks!!)
http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2013/05/20130522_JGB2_0.jpg (http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2013/05/20130522_JGB2.jpg)

JPY is being sold like there's no tomorrow (which for the Japanese may well be true)


http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2013/05/320130522_JGB2_0.jpg (http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2013/05/320130522_JGB2.jpg)
Meanwhile the Nikkei 225 is tearing hiugher once again - now up ovcer 85% from its Oct 2012 lows...
http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2013/05/20130522_JGB4_0.jpg (http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2013/05/20130522_JGB4.jpg)
Charts: Bloomberg

http://www.zerohedge.com/news/2013-05-22/japanese-bond-market-halted-open-selling-purge-goes-airborne

This excellent video visually explains the Japanese debt bomb and why Kyle Bass is right when he says Japan is doomed and implosion of the Japanese bond market is just a matter of time. There is no way the world can weather such an event. I think Japan is the the likely trigger for the big implosion:


http://www.youtube.com/watch?v=Njp8bKpi-vg

[messianicdruid]

"...the government gets to spend more than it EARNS..."

EVERYTHING the government spends is more than it earns!

[Serpo]

"...the government gets to spend more than it EARNS..."

EVERYTHING the government spends is more than it earns!


The gov is a liability.............



This could be the Fukushima of the financial system.

[Spectrism]

So, what is the likely chain of events? Any guesses?

[Large Sarge]

have to see if it persists,

if it does, then that Japanese QE announced a few weeks ago, was a failure, as everyone is fleeing the Japanese bond market...

like it might have been the straw that broke the camels back

[mamboni]

have to see if it persists,

if it does, then that Japanese QE announced a few weeks ago, was a failure, as everyone is fleeing the Japanese bond market...

like it might have been the straw that broke the camels back

Bond market selloff ----> rising interest rates -----> massive bond losses for Japanese banks -----> trigger derivative losses ----> massive losses to US and European banks ------> cascading derivative losses ------> two choices for soveriegns: (1) monetize losses leading to hyperinflation (2) writedown losses leading to bank failures, wiping out depositors, pension funds and institutions (massive deflation TEOTWAWKI).

The important thing to note is that there is no way out for Japan. Their only choice is default or hyperinflation. Hyperinflation is the less painful and destructive choice to the bankers; because a default will trigger a system-wide derivatives implosion. Hyperinflation in Japan will put the yen carry trade on megasteroids, leading to inflation in the rest of the world.

Got gold?

[Spectrism]

Bond market selloff ----> rising interest rates -----> massive bond losses for Japanese banks -----> trigger derivative losses ----> massive losses to US and European banks ------> cascading derivative losses ------> two choices for soveriegns: (1) monetize losses leading to hyperinflation (2) writedown losses leading to bank failures, wiping out depositors, pension funds and institutions (massive deflation TEOTWAWKI).

The important thing to note is that there is no way out for Japan. Their only choice is default or hyperinflation. Hyperinflation is the less painful and destructive choice to the bankers; because a default will trigger a system-wide derivatives implosion. Hyperinflation in Japan will put the yen carry trade on megasteroids, leading to inflation in the rest of the world.

Got gold?


Sounds excellent! We are sure to get major doom or uber-doom.

[Serpo]

hint, keep an eye on sushi prices .....