Friday, August 20, 2010

Japanese Government Bonds near their 20-year High

Japan 5-year CDS is making Higher Highs/Lows.



JGBs are drawing investors attention recently as they are close to 145 which was their 2003 High price. Monthly RSI is not even in Overbought condition so timing of a Short sell would be of a great importance since this market has been ranging for a full decade with no meaningful correction.

Kyle Bass from Hayman Advisors made a pile of money in the sub-prime crisis and he is now on the wires for his Short JGB position:

While deflationary pressure is building and everybody is starting again the bond bubble talk I'm pleased to observe a high momentum trend in bond prices and I believe it will be a nice educational experience to see how high it can go until it finally breaks. Then when inflationary cycle begins we will be ready to start building an equities allocation.

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