QE Singularity: No Japanese 10-Yr Bonds Trade

No Japanese 10-year bonds traded on Tuesday. The BoJ is in perfect control. This should be nirvana. Why Isn’t it?

Japan has reached a state of QE singularity: Not a Single Japanese 10-Year Bond Traded Tuesday.

No buys. No sells.

Barclays Securities Japan rates strategist Naoya Oshikubo, summed it up, with perhaps an understatement: “the JGB market was generally thin.”

Ridiculous Comment of the Day

“The upside for the BOJ is that with such little going on in the market, it makes it easier to control the yield curve, with less need for intervention.”

No need for intervention? Excuse me, how is that not 100% intervention?

The Bank of Japan is an unlimited buyer at 0.11%. If the yield on the ten-year bond rose to 0.12% the Bank of Japan would rush in and squash the move.

What’s the Message?

I Can Help!

I offered these suggestions in Note to BoJ: Try Something Different or Look Perpetually Foolish.

Japan should stop mickey mousing around and buy all of the bonds. However, there may be reluctant sellers. After all, 0.11% for 10 years must be extremely attractive.

To make 0.11% less attractive, all Japan has to do is tax bondholders 1%. Bondholders would dump their bonds immediately, if not sooner, and the Bank of Japan would own 100% of them within a day.

I suggested the same thing on April 22, 2016, in Mish’s Sure Fire Proposal to End Japanese Deflation: Negative Sales Taxes, 1% Monthly Tax.

Mish’s Four Pronged Proposal to End Japanese Deflation

My Price

My price for this amazing plan is $0. It’s free for the taking.

Yet, zero seems woefully inadequate for such a brilliant plan that is absolutely guaranteed to work, especially when Japan has tried and failed for decades to produce inflation.