An Unprecedented $660 Billion In Excess Debt Demand, And What It Means For Bond Yields

This article declares the bond market will collapse with an accompanying soaring gold price.  But between now and then, bonds should continue their rally (yields and interest rates should continue to decline as QE artificially boosts demand for bonds, therefore outstripping supply)--and gold prices may further decline, despite the Fed's and Bank of Japan's balance sheets continuing to grow to grotesque levels.

In other words, expect choppy markets if you're long precious metals, but your day will come eventually, when inflation rears its ugly head.

http://www.zerohedge.com/news/2013-04-21/unprecedented-660-billion-excess-debt-demand-and-what-it-means-bond-yields

Kuroda Says Bank of Japan Will Consider Buying Derivatives

End of days is looming for Japan.

http://www.bloomberg.com/news/2013-03-11/kuroda-says-bank-of-japan-will-consider-buying-derivatives-1-.html

Japanese Government Demands BOJ Do QE 9 One Month After Failed

The USS Japan, Inc. ship is about to sink.

http://www.zerohedge.com/news/2012-10-22/japanese-government-demands-boj-do-qe-9-one-month-after-failed-qe-8

Bank of Japan Sprays World With Surprising ¥10 Trillion Gift In Valentine's Day Liquidity

This latest round of QE by the Bank of Japan is only bullish for gold.  The markets just don't know it--yet. 

http://www.zerohedge.com/news/bank-japan-drowns-world-surprising-%C2%A510-trillion-valentines-day-liquidity-present

THE BOJ ANSWERS THE TRILLION DOLLAR QUESTION: WHAT IS CAUSING THE COMMODITY RALLY?

http://pragcap.com/the-boj-answers-the-trillion-dollar-question-what-is-causing-the-commodity-rally

“While the strong increase in commodity prices has been driven by global economic growth propelled by emerging economies, speculative investment flows into commodity markets have amplified the intensity of the price surge. The dynamics of global commodity prices has been changing as well, in accordance with the growing presence of financial investors in commodity markets. The entry of new financial investors has paved the way for the “financialization of commodities”. Consequently, global commodity markets have become more sensitive to portfolio rebalancing by financial investors, which has made commodity markets more correlated with other asset markets, including major equity markets. Furthermore, globally accommodative monetary conditions have played an important role in the surge in commodity prices, both by stimulating physical demand for commodities and driving more investment flows into financialized commodity markets.”


Unlike the SF Fed, which just yesterday absolved the Fed of any impact on commodity prices (in fact said QE2 was exerting downward pressure on commodity prices), the BOJ performs multidimensional & unbiased research that finds the Fed and global central banks are having a dramatic impact on commodity prices.

Yen intervention

http://www.ft.com/cms/s/0/43627416-c074-11df-8a81-00144feab49a.html

Now that the Bank of Japan has manipulated the yen down, will they draw criticism from the US for "currency manipulation", as they have from Europe? The US has already pointed fingers at China for currency manipulation. Could it be that all sovereign governments are manipulating their native currencies down in an attempt to stimulate their exports? Guess which store of value wins when paper currencies race each other to the bottom? I'll give you two guesses. And they're not colored pieces of paper.

Banks buying Treasuries

http://www.bloomberg.com/apps/news?pid=20601087&sid=ab.TUjV2SQNE&pos=5

Banks are increasing purchases of U.S. government securities to pump up profits while lending to businesses languishes near the lowest levels since credit markets started to freeze almost three years ago.

Banks, facing increased regulation after posting $1.78 trillion of writedowns and losses since the start of 2007, are taking advantage of the record gap between their borrowing costs and yields on U.S. debt instead of lending, according to data compiled by Bloomberg.

The increase in government debt comes as banks shrink their balance sheets for the first time since the Great Depression, further restricting lending, particularly for small businesses that rely on banks for financing, according to Brown Brothers Harriman & Co.

Buying longer-term debt is reminiscent of Japan, where banks increased their holdings of government bonds to record levels during the country’s so-called lost decade of economic stagnation that began in the 1990s, according to Michael Cheah, who manages $2 billion in bonds at SunAmerica Asset Management in Jersey City, New Jersey.

Like Japan’s response to the real estate collapse in the 1990s, the U.S. flooded the economy with cash only to see financial institutions sock the money away in bonds instead of making loans. Yields on 10-year Japanese bonds ended last week at 1.27 percent.

“It’s the Japanese movie, just an American version,” said Cheah, who worked for Singapore’s central bank. “The next scene is that after banks buy more and more government bonds it will be very difficult for the Fed to raise interest rates because they will lead to massive losses in the banks and cause them trouble all over again.”

Quantitave easing Japanese-style, part 2

http://www.bloomberg.com/apps/news?pid=20601087&sid=amv4LRn9Y4ek&pos=1