Japan’s Negative-Yield, Inverted Bond Market Close to Breaking Point

Japan’s dysfunctional bond market is not only inverted between three month and eight years, it also sports negative yields out to 10 years.

The yield curve also inverts between 30 and 40 years, albeit in positive territory.

Inverted means longer-dated bonds yield less than shorter-dated bonds.

“It wouldn’t be surprising to see some BOJ operations fail,” said Yusuke Ikawa, a salesperson at UBS Group AG’s Knowledge Network in Tokyo. “The biggest risk of that is in superlong bonds.”