🔴 Japanese insurers' unrealized LOSSES are HUGE
▶️ The biggest insurers’ paper losses on their domestic bond holdings hit a record ¥8.5 TRILLION ($60BN) in Q1. 💥 Nippon Life, the largest insurer and the world’s 6th-largest saw ¥3.6TN ($25BN) LOSS. Source: Global Markets Investor
Yield on Japanese government hashtag#bonds are back to the highs they reached in May.
Japan was always held up by the MMT (Modern Monetary Theory) crowd as an example for how debt doesn't matter because governments can always cap yields. That view needs to be retired along with MMT. Fiscal space seems to be finite. Not infinite. Source: Robin Brooks, Bloomberg
Treasury Rate Volatility $MOVE falls to lowest level since January 2022
Source: Barchart
German long-term bond yields keep rising.
The yield on 30y Bunds has reached 3.23% — nearing its highest level in 14 years. Source: HolgerZ, Bloomberg
Great chart by Otavio (Tavi) Costa which summarizes very well what the Treasury market it currently trying to tell us:
▶️ Front end of the curve (short-term rates): the growing influence of the "shadow Fed chair" on short-term rates ▶️ Long end of the curve (30Y): The mounting fiscal disarray It seems that risk assets and store of values are the main beneficiaries of this backdrop. Source: Bloomberg, Tavi Costa
$TLT vs. $SPX
New lows for LT Treasuries vs. the S&P 500. But hey, at least you got your 4% 🫠 Source: Ian McMillan, CMT @the_chart_life
Article by FT ▶️ Investors pile into tokenised Treasury funds.
Stablecoin issuers and traders are attracted by yields on offer and potential use as collateral in some derivatives transactions. 🔴 Crypto companies and traders are pouring billions of dollars into tokenised versions of money market and Treasury bond mutual funds, as they look beyond stablecoins to other places to park excess cash that can also give them some yield. 🔴Total assets held in tokenised Treasury products — which include funds whose units have been converted into digital tokens as well as some tokenised US government bonds — have jumped 80 per cent so far this year to $7.4bn, according to data group RWA.xyz. 🔴Funds run by BlackRock, Franklin Templeton and Janus Henderson have grown particularly rapidly, with combined assets tripling. Inflows have been driven in part by crypto traders, many of whom are finding tokenised funds a more attractive place than stablecoins to park their money. Some investors are also starting to use these funds as an easy-to-trade form of collateral in crypto derivatives transactions. https://lnkd.in/e25ZwDG5
It seems the world is becoming MORE comfortable with USA sovereign risk once again...
(below US CDS) Source: Bloomberg, www.zerohedge.com
