Yep I agree that the BOJ needs to execute a better on handling the JGB'S. It's just causing a ruckus in the market. They need to do MORE then they are now because obviously they don't have a handle on the bond market right now. I'm sure Japanese faith in the BOJ will come it's just taking a while. I don't see how their government could have come all this way just to let their agenda get squashed now. I'm very confident we will see a break of 104 and at least up to 105 in June.
ive read articles on ZH (various press) saying banks will sell off bonds if they believe inflation will be 2% ... and its a race to the bottom for them ... im not sure but it seems like an odd thing to do if the central bank is buying these bonds (as with fed) at higher and higher nominal prices .... and frankly nobody really believes there will be 2% inflation do they!
the market is getting pants in a twist over nothing ... the BOJ needs to put a steady bid in JGB market to essentially cap yields to firstly .9% .. then .8% .. then .7% all the way to .3% or whatever their target is ... just absorb all the selling ... simple. what they are doing at the moment is letting the market sell JGB off ... then making a huge bid ... this is logistics issue which it sounds like they are addressing with proposal of smaller bond buying done every other day (perhaps they will end up doing every day). also there is an issue of faith .. kurroder needs to just say he intends to drive the yield curve down ... which will generate lower borrowing and consequently inflation ... i dont understand the intellectual problem with this? do you?
it could fall all the way to 101 and that trendline would still be intact ... i think we go higher ..although im getting frutrated with usdjpy tbh, i like easy trades where there isnt tremendous volatility ... its been pretty smooth going for six months or so (with possibly exception of period right before the key BOJ meeting where kurroda announced policy ... i think theres easy money to be made in other markets in the near term .. i like audusd but only if it breaks below support below us ... gbpusd short with carney ... gold short ... so plenty to do....