🔴 Japan’s bond market is flashing red
Liquidity in Japan’s government bond market is deteriorating fast.
The JGB Liquidity Index jumped to 9.5, the worst reading on record. The index has doubled over the last 12 months.
What is driving it:
🟡 Conditions in the $7.6T JGB market have worsened sharply since 2022 as yields posted one of the steepest increases in history.
🟡 Bank of Japan has significantly reduced bond purchases.
🟡 Japanese life insurers have sold a record amount of bonds.
🟡 Foreign investors now account for about 65% of monthly cash bond trading, up from 12% in 2009.
🟡 These investors hold bonds for shorter periods, which increases volatility and weakens liquidity.
The structure of the market has changed. Long term domestic buyers are stepping back. Short term foreign flows are filling the gap.
Japan’s bond market is moving closer to a real liquidity crisis, not just higher yields.
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Liquidity in Japan’s government bond market is deteriorating fast.
The JGB Liquidity Index jumped to 9.5, the worst reading on record. The index has doubled over the last 12 months.
What is driving it:
🟡 Conditions in the $7.6T JGB market have worsened sharply since 2022 as yields posted one of the steepest increases in history.
🟡 Bank of Japan has significantly reduced bond purchases.
🟡 Japanese life insurers have sold a record amount of bonds.
🟡 Foreign investors now account for about 65% of monthly cash bond trading, up from 12% in 2009.
🟡 These investors hold bonds for shorter periods, which increases volatility and weakens liquidity.
The structure of the market has changed. Long term domestic buyers are stepping back. Short term foreign flows are filling the gap.
Japan’s bond market is moving closer to a real liquidity crisis, not just higher yields.
✅
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❕ COMEX data explains the move
The latest COMEX report shows that JP Morgan Securities closed its silver shorts exactly at the bottom of the selloff, around the $78 settlement. Price started to recover from that level almost immediately.
On the same day, 2,514 Feb26 silver contracts went to delivery, an unusually large number for a typically quiet month. JPM was the short issuer behind all 633 delivery notices.
The sequence points to a deliberate liquidation event, designed to force selling and allow shorts to be closed at the lows.
The latest COMEX report shows that JP Morgan Securities closed its silver shorts exactly at the bottom of the selloff, around the $78 settlement. Price started to recover from that level almost immediately.
On the same day, 2,514 Feb26 silver contracts went to delivery, an unusually large number for a typically quiet month. JPM was the short issuer behind all 633 delivery notices.
The sequence points to a deliberate liquidation event, designed to force selling and allow shorts to be closed at the lows.
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Media is too big
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If you’re wondering why asset prices are getting hit like gold down over 10% and silver down more than 30% in a day then listen to this Fed Chair nominee Kevin Warsh clip.
He’s openly critical of QE and favors a tighter Fed balance sheet which means less liquidity across markets.
He’s openly critical of QE and favors a tighter Fed balance sheet which means less liquidity across markets.
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JUST IN: Elon Musk becomes the first person in history to surpass $850 billion in net worth.
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