Just over 4 hours ago we discussed the stunning collapse in 10Y Japanese bond yields. Since then – things have taken a very dramatic turn for the worse for bonds. 10Y JGB yields have exploded higher. The move from 32bps to 65bps triggered circuit breakers on the Tokyo Stock Exchange in JGB Futures trading as JGB prices plunged by their largest amount since September 2002. We can only imagine there is liquidations galore occurring given the massive outsize moves we are seeing in Japanese bonds, stocks, FX, swaps, and CDS. Did the BoJ just lose control?
Now that is a reversal!!
Kyle Bass – “Japan Will Implode Under Weight Of Their Debt”
Soros: Japan’s New Stimulus May Trigger Yen Avalanche
It is a “Giant Experiment,” he warns, but when you are backed into a corner and your debts are north of 20 times your government tax revenue, “you’re already insolvent.”
China slaughters thousands of birds to stem flu’s spread
BEIJING (AP) — China announced a sixth death from a new bird flustrain Friday, while authorities in Shanghai halted the sale of live fowl and slaughtered all poultry at a market where the virus was detected in pigeons being sold for meat.
The mass bird killing is the first so far as the Chinese government responds to the H7N9 strain of bird flu, which has sickened 16 people, many critically, along the eastern seaboard in its first known infections of people. The first cases were announced Sunday, while two more were reported Friday, both retirees who were seriously ill.
Shanghai closes poultry markets over bird flu
Today is one of “those days” when everything changes big time
Gold and silver holding key levels, key supports.
The employment data will affect the global markets and it will be the “trade of the day”, and probably the week
Data arriving 8:30 AM EST TIME
GIGANTIC MISS: JUST 88K NEW JOBS, UNEMPLOYMENT RATE FALLS TO 7.6%, DOW OFF 137
The jobs number is out, and it’s bad.
Just 88K new jobs were created in March.
That’s well below the 190K that analysts had expected.
It’s also well below the “whisper” number of 150K
The unemployment rate fell to 7.6%, amid a drop in Labor Force Participation.
The slight drop in unemployment isn’t necessarily a good sign.
Retail Jobs Collapsed In March
Even The US Energy Sector Lost Jobs
German 10Y yields -1bp at 1.229%, lowest since Aug
Deutsche Bank On Central Bank Intervention: “We Are Flying Blind”
From DB’s Jim Reid:
The move by the BoJ plays into our ‘Journey into the Unknown’ thesis and its fair to say that there really is no precedent for what Central Banks are currently doing, or threatening to do, on a global scale. You’ll be able to read chapter and verse from strategists trying to explain what’s likely to result from such moves but the honest truth is that we are flying blind in terms of historical evidence even if we go back centuries. My guess is that medium-term global inflation is being locked in by these moves but that the first move is likely to be maintaining the low bond yield world for some time even if there are brief selloffs. For riskier assets, our simple models based on variables like the PMIs tell us that we may be due a set back soon. These models survived the liquidity burst of QE1 and QE2 but will they now be overpowered by the combined OMT potential, QE-infinity and the BoJ’s new ‘Carry-O-QE’ (ok I know it won’t catch on)? Our base case remains that we will eventually see a set back as we approach the end of H1 on weaker data (especially in Europe) but that outside of a shock, the downside will be perhaps limited by global Central Bank liquidity. Fascinating times and we can’t help thinking that these moves are not without consequence. If it really is as easy as printing money then all Central Bank’s would have done it a long time ago. That such a period for global CB’s is unprecedented should serve as a warning to watch for unintended consequences.
3 Huge Stories Shook Asia Last Night
Surprise: Dexia Credit Local May Need Emergency Central Bank Loans Again
Gregor Peter‏@L0gg0l2 h
Exploding JGB yields may force Japan to liquidate its US treasury positions
BOE said rising equity markets don’t reflect the underlying economic situation and warned that investors may be underestimating risks
Futures Are Crumbling, As The German Market Gets Poleaxed By Huge Trade
Japanese, France, Belgium, Netherlands and Austria 10-yr bond yields hit fresh record lows.
Meanwhile, the German 10-year yield is down to 1.23%.
For all the talk about government debt, the real story is that the world is having a hard time rotating out of it, and are still flocking to it at any hint of market trouble.
Joe Fridays says…It’s “Jobs Friday”….Two-thirds chance banks decline in price!
It’s “Jobs Friday” as we await the call per the employment report in a couple of hours.
Joe Fridays says…Jobs are very important for sure… don’t over look the importance of banks and the patterns they have created over the past few years in the charts below!!!
CLICK ON CHART TO ENLARGE
Why could the situation in the Banks be as or more important than the jobs report this morning? Banks were a key player in the large decline from 2007 to 2009 and they were a key player in the rally from the 2009 lows until now.
The Bank index (BKX) and Financial ETF (XLF) both find themselves at their 38% Fibonacci retracement level of the financial crisis and have created bearish rising wedges that two-third of the time suggest lower prices are ahead.
Joe Fridays says….Job’s Friday is important! Just as important is how the Banks handle these patterns in the 2-pack above. So Goes the Banks, So Goes the S&P 500. It would be good for a good employment report to come out in a couple of hours, it would be even better for the economy if Banks would break to the upside!
Bonds confirming Coppers concern that the global economy is slowing down? (See slowdown post here)
CLICK ON CHART TO ENLARGE
The 3-pack above reflects that Copper and key interest rates are breaking key support, potentially reflecting a global slow down. The break of support of these three above makes the upcoming price action of the banks all the more important!!
|S&P/TSX 60 IX||Jun13||699.00||-6.40||702.90||702.90||696.90||08:44:10|
|MEX BOLSA IDX||Jun13||43,591.00||-204.00||43,795.00||43,935.00||43,425.00||16:00:00|
90 MILLION AMERICANS EXIT LABOR FORCE
Things just keep getting worse for the American worker, and by implication US economy, where as we have shown many times before, it pays just as well to sit back and collect disability and various welfare and entitlement checks, than to work .The best manifestation of this: the number of people not in the labor force which in March soared by a massive 663,000 to a record 90 million Americans who are no longer even looking for work. This was the biggest monthly increase in people dropping out of the labor force since January 2012, when the BLS did its census recast of the labor numbers. And even worse, the labor force participation rate plunged from an already abysmal 63.5% to 63.3% – the lowest since 1979! But at least it helped with the now painfully grotesque propaganda that the US unemployment rate is “improving.”
People not in labor force: