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"Japan has over 250% public debt-to-GDP. " And an inflation rate of ... oh sorry that didn't fit the narrative, I'll just skip that bit. "The market basically

"Japan has over 250% public debt-to-GDP. " And an inflation rate of ... oh sorry that didn't fit the narrative, I'll just skip that bit. "The market basically goes “no bid”." except for the Gilt-Edged Market Makers (GEMMs) because "GEMMs are committed to make, on demand and in all conditions, continuous and effective two-way prices to their clients, in all gilts for which they are recognised as a market maker." (GEMM Guidebook, Sept 2021, UK Debt Management Office)[0] I'll leave the rest of the article to the Gell-Mann Amnesia hypothesis. [0]: https://www.dmo.gov.uk/media/22bbjndz/guidebook200921.pdf https://www.dmo.gov.uk/media/22bbjndz/guidebook200921.pdf

rippercushions 4y ago
Japan's inflation rate is currently tracking at 3%. Which sounds piddling by Western standards, but is a massive change compared to -1% they were experiencing as late as last year, and not to mention the more-or-less zero they've been at for the last 20-30 years. https://tradingeconomics.com/japan/inflation-cpi https://tradingeconomics.com/japan/inflation-cpi
- Danieru 4y ago
  Indeed, the Bank of Japan has been hoping for inflation like this for twenty years. They are not going to complain now that their wish has been granted. 3% is massive, in a good way. Japan's problem is the Americans have absurd inflation causing rate increases and encouraging the carry trade.
prottog 4y ago
"No bid" doesn't mean you log into your broker and see literally no bids for your gilts. As you rightly point out, primary dealers are obligated to supply a bid and an ask in the gilts markets, and in return receive various privileges in the same markets. But obviously that doesn't mean that they are obligated to absorb billions of pounds in selling pressure (due to large pension funds needing to meet margin calls) without significantly moving prices, which is the question at hand, and that's what the author means by "no bid".

rippercushions 4y ago

Japan's inflation rate is currently tracking at 3%. Which sounds piddling by Western standards, but is a massive change compared to -1% they were experiencing as late as last year, and not to mention the more-or-less zero they've been at for the last 20-30 years. https://tradingeconomics.com/japan/inflation-cpi https://tradingeconomics.com/japan/inflation-cpi

Danieru 4y ago
Indeed, the Bank of Japan has been hoping for inflation like this for twenty years. They are not going to complain now that their wish has been granted. 3% is massive, in a good way. Japan's problem is the Americans have absurd inflation causing rate increases and encouraging the carry trade.

prottog 4y ago

"No bid" doesn't mean you log into your broker and see literally no bids for your gilts. As you rightly point out, primary dealers are obligated to supply a bid and an ask in the gilts markets, and in return receive various privileges in the same markets. But obviously that doesn't mean that they are obligated to absorb billions of pounds in selling pressure (due to large pension funds needing to meet margin calls) without significantly moving prices, which is the question at hand, and that's what the author means by "no bid".