(UPDATE on JGB yield) After hitting the all-time low of 0.315% in the morning market, the yield on JGB 10 years reversed violently in the afternoon market, hitting as high as 0.65% when the bond futures started to collapse. Nikkei Shinbun quotes a bond strategist who spoke the truth:
In the low-yield environment, BOJ is the only buyer [of JGB]. When investors start to sell, investment banks (who cannot buy and hold bonds) has to sell futures to avoid losses, resulting in the sharp drop in the JGB futures.
That's what you get, when the central bank corners the market. Japan's central bank is 55% owned by the national government.
A very good vid from Addogram:
Rise of the interest rate on the government bond to 4% and it's game over, the video says. Right now, in the broken bond market that from now on only front-runs Bank of Japan who will purchase 70% of issues each month, the yield of 10-year JGB is 0.315%, the historical new low. According to Nikkei Shinbun, the market thinks it will breach 0.3% soon.
In the meantime, the Japanese stock market seems to be broken, thanks to the crazy central bankers working hard for the LDP administration. While the rest of Asia falls due to the growth and job concerns in the US, one of their chief export destinations, worries over the new strain of bird flu and worries over North Korea, Nikkei's on a crack, breaching 13,000 for the first time since the so-called "Lehman crisis" as the Japanese call the global financial crisis triggered by a host of financial meltdowns in the prominent US financial institutions including Lehman Brothers and AIG.
The Nikkei Average is currently up 475 points to 13,109, with the firm (almost religious) belief that the financial maneuvering will result in the prosperous real economy and that the higher stock market means the better real economy.
In a country where the Marxian economics is still taught and researched in universities, many Japanese don't have a clue how these central bankers worldwide think and behave. They clearly think the bankers have the best interest of average citizens in mind.
Just like in matters nuclear and radiation, "Well I don't know much about it but the government and those experts say it is safe, so who am I to argue?"