Capital Markets, Financial

BGC Partners eyes new platform to trade US Treasuries

BGC Partners plans to launch a new platform to trade US Treasuries early next year, in a bid to return to a market in the middle of evolution, according to people familiar with the plans.  The company, spun out of Howard Lutnick’s Cantor Fitzgerald in 2004, sold eSpeed, the second-largest interdealer platform for trading Treasuries, […]

Continue Reading


Sales in Rocket Internet’s portfolio companies rise 30%

Revenues at Rocket Internet rose strongly at its portfolio companies in the first nine months of the year as the German tech group said it was making strides on the “path towards profitability”. Sales at its main companies increased 30.6 per cent to €1.58bn while losses narrowed. Rocket said the adjusted margin for earnings before […]

Continue Reading


Renminbi strengthens further despite gains by dollar

The renminbi on track for a fourth day of firming against the dollar on Wednesday after China’s central bank once again pushed the currency’s trading band (marginally) stronger. The onshore exchange rate (CNY) for the reniminbi was 0.28 per cent stronger at Rmb6.8855 in afternoon trade, bringing it 0.53 per cent firmer since it last […]

Continue Reading


Nomura rounds up markets’ biggest misses in 2016

Forecasting markets a year in advance is never easy, but with “year-ahead investment themes” season well underway, Nomura has provided a handy reminder of quite how difficult it is, with an overview of markets’ biggest hits and misses (OK, mostly misses) from the start of 2016. The biggest miss among analysts, according to Nomura’s Sam […]

Continue Reading


Spanish construction rebuilds after market collapse

Property developer Olivier Crambade founded Therus Invest in Madrid in 2004 to build offices and retail space. For five years business went quite well, and Therus developed and sold more than €300m of properties. Then Spain’s economy imploded, taking property with it, and Mr Crambade spent six years tending to Dhamma Energy, a solar energy […]

Continue Reading

Categorized | Capital Markets

Bank of Japan tests new firepower

Posted on November 17, 2016

The Bank of Japan has launched its first infinite bond tenders — promising to buy as many bonds as investors want to sell at a fixed price — asserting its new cap on the yield curve with unlimited firepower.

In what traders described as a “show of intolerance” at recent market moves, the BoJ offered to buy as many bonds as the market wanted to sell with between one and five years left to maturity. It did not bid for 10-year bonds, where it has capped the yield at 0 per cent.

The move by the central bank makes use of financial weaponry that the BoJ granted itself just eight weeks ago and was deployed far earlier than analysts had expected. On Tuesday, with global markets still adjusting to the implications of Donald Trump’s presidency and a bond rout under way, yields on the 10-year JGB closed above zero for the first time since February.

In September, the BoJ brought in a new policy of “yield curve control”, where instead of focusing on an asset purchase target of ¥80tn a year, it pledged to cap 10-year bond yields at “around 0 per cent”. That means buying as many bonds as investors want to sell at that level.

After the 10-year JGB yield turned positive earlier this week, traders had said that coming sessions would likely see the market testing the BoJ and how far it was prepared to go to assert its new policy. The BoJ’s actions on Thursday suggest it intends to play a cat-and-mouse game with markets, acting to control yields, but not offering certainty about when it will intervene or at what price.

The BoJ needed to show that it was not going to tolerate the situation, said Shuichi Ohsaki, Bank of America Merrill Lynch rates strategist. The central bank, he added, had probably decided to use the fixed-rate purchase operation rather than simply increasing its existing JGB purchasing operations because it sees the current volatility as a temporary phenomenon.

“The Bank of Japan’s purchase amount is already huge and they probably think that they are already doing enough to keep yields down once the Trump-related volatility goes away,” said Mr Ohsaki. “They would not want to increase their normal [purchasing] operation because it is harder to reduce it afterwards.”

To achieve its aim, the central bank offered to buy unlimited two-year bonds at a yield of minus 0.09 per cent and unlimited five-year bonds at a yield of minus 0.04 per cent. Those yields are slightly higher than where the market was trading on Wednesday.

As a result, the BoJ found no sellers and did not buy a single bond. Instead, the market recoiled, with yields falling across the short end of the yield curve. Two-year yields fell from minus 0.1 per cent to minus 0.15 per cent and five-year yields dipped to minus 0.08 per cent from minus 0.05 per cent.

Analysts said that Thursday’s action might represent the BoJ performing an experiment of its own to see how effective its fixed-price purchasing operation really is in case the global bond sell-off gathers momentum.

Traders noted that the yield on the 10-year note fell briefly back below zero during the afternoon session and the strong market reaction suggests the new policy could prove powerful.