In a research note published on January 5, Bin Gao of Bank of America Merrill Lynch Global Research argued that the market looked nervous. “When rates, normally moving 1.5bp a day for the last two years, jump 10bp one day and another 6bp a couple of days later, heads turn,” he wrote. “That was what happened in the JGB market in mid-December before the close of 2010, supposedly a good year for buying JGBs.”
Debt support
Japan’s extraordinary level of debt has been supported for decades primarily by local investors, both institutions and individuals whose savings are recycled via deposits at the big banks into the JGB market.
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