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Monday, November 30, 2009

1.2% over 10 Years?

Per Bloomberg:

Japanese bonds rose, following their best monthly performance this year, after the Bank of Japan said it will hold an emergency policy meeting today in Tokyo.

Ten-year yields dropped to the lowest level since January on optimism policy makers will expand extraordinary measures to increase liquidity in the financial system. The central bank may consider increasing monthly debt buying from the current 1.8 trillion yen ($20.7 billion), said Christian Carrillo, a senior interest-rate strategist at Societe Generale SA in Tokyo.

“They cannot come out of that meeting without doing anything and my guess is that it will be more purchases of long- term JGBs,” Carrillo said. The BOJ may boost monthly buying of government bonds to 2.1 trillion yen, he said.

The yield on the 1.4 percent bond due September 2019 fell 3.5 basis points to 1.225 percent at the 11:05 a.m. morning close in Tokyo at Japan Bond Trading Co., the nation’s largest interdealer debt broker.
While the chart below is the 7-10 year Japanese Government Bond Index (rather than just the 10 year yield, which I was unable to find), it does show how low yields are, BUT more amazing, how much lower they can potentially go (think 2002).



This almost makes that 3.2% yield on 10 year Treasuries seem attractive huh?

Source: Barclays