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Alternative Market Briefing

Japan could face shortage of bonds

Monday, June 10, 2013

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Peter Tasker
From Precy Dumlao, Opalesque Asia – The Bank of Japan is buying all annual insurance and government bonds in Tokyo, leading to scarcity in bonds in the market.

So said Peter Tasker of Arcus Research Ltd. in the recent 2013 Opalesque Japan Roundtable. Arcus manages hedge and long only money in the Japanese market.

The 2013 Opalesque Japan Roundtable was sponsored by Eurex and Tausig Capital, and took place on April 24th in Tokyo.

Tasker was reacting to a question posed by Rory Kennedy of Rogers Advisory to Tasker on what would happen to 'Japan's debt time bomb.’

Tasker replied, "The answer to that is not well understood anywhere in the world. People make a lot of fuss about debt in the United States even, which has got historically quite low levels of public debt. So there is a lot of political commotion about debt, and some people have aggressively shorted bonds even in the US, and that of course turned out to be a disastrous trade. In Japan this trade has been called the widow-maker."

He continued that the BoJ would have a large amount of government bonds if it continues buying them and it could not just cancel them out. But sho......................

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