Forget the Fed, should we be Worrying about Japan

If the Federal Reserve isn’t going to be the catalyst for interest rates finally moving higher, maybe it will be another player??  That’s the question floating around today after the Bank of Japan made an inconsistent choice (via Reuters).

“This morning, the Bank of Japan did not offer to buy JGBs under its massive asset purchase programme, as the Ministry of Finance conducted its monthly 2.4 trillion yen ($22.91 billion US dollar) 10-year JGB auction…”

The removal of the artificial demand sent Yen futures falling, and the Yen based Nikkei 225 up over 2% on the day.

JPY Nikkei(Disclaimer: Past performance is not necessarily indicative of future results)

But the more interesting action was in Japanese Bonds, which fell (rates higher), and in other world bond prices such as the US 30 yr and 10 yr. US 30yr Bond were down about -2.00% today (interest rates higher), and in a year where bond prices have done nothing but go up, that’s something.  The question, of course, is whether this is a preview of what will happen when the Fed stops bidding on US bonds.

This is only one day in the market, but the timing of the BOJ along with the return of US traders from the long holiday weekend has certainly caused an uptick in market volatility across the board. Taking a glance at the rest of the futures board today, you see that there are some other big moves today outside of bonds. Coffee up 3.4%, Lean Hogs up 1.83%, Crude down 3.12%, Wheat down 1.56%, Gold down 1.56%, and Soybeans up 0.78%.

Finviz Chart(Disclaimer: Past performance is not necessarily indicative of future results)
Table Courtesy: Finviz

While the bond move no doubt caught many on the wrong foot (it had been trending nicely upwards, after all), this type of volatility should be a good thing if it continues into the fall. Here’s hoping.

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The performance data displayed herein is compiled from various sources, including BarclayHedge, and reports directly from the advisors. These performance figures should not be relied on independent of the individual advisor's disclosure document, which has important information regarding the method of calculation used, whether or not the performance includes proprietary results, and other important footnotes on the advisor's track record.

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See the full terms of use and risk disclaimer here.

Disclaimer
The performance data displayed herein is compiled from various sources, including BarclayHedge, and reports directly from the advisors. These performance figures should not be relied on independent of the individual advisor's disclosure document, which has important information regarding the method of calculation used, whether or not the performance includes proprietary results, and other important footnotes on the advisor's track record.

Benchmark index performance is for the constituents of that index only, and does not represent the entire universe of possible investments within that asset class. And further, that there can be limitations and biases to indices such as survivorship, self reporting, and instant history.

Managed futures accounts can subject to substantial charges for management and advisory fees. The numbers within this website include all such fees, but it may be necessary for those accounts that are subject to these charges to make substantial trading profits in the future to avoid depletion or exhaustion of their assets.

Investors interested in investing with a managed futures program (excepting those programs which are offered exclusively to qualified eligible persons as that term is defined by CFTC regulation 4.7) will be required to receive and sign off on a disclosure document in compliance with certain CFT rules The disclosure documents contains a complete description of the principal risk factors and each fee to be charged to your account by the CTA, as well as the composite performance of accounts under the CTA's management over at least the most recent five years. Investor interested in investing in any of the programs on this website are urged to carefully read these disclosure documents, including, but not limited to the performance information, before investing in any such programs.

Those investors who are qualified eligible persons as that term is defined by CFTC regulation 4.7 and interested in investing in a program exempt from having to provide a disclosure document and considered by the regulations to be sophisticated enough to understand the risks and be able to interpret the accuracy and completeness of any performance information on their own.

RCM receives a portion of the commodity brokerage commissions you pay in connection with your futures trading and/or a portion of the interest income (if any) earned on an account's assets. The listed manager may also pay RCM a portion of the fees they receive from accounts introduced to them by RCM.

See the full terms of use and risk disclaimer here.

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