A confluence of bearish news hit the tape today. Overnight, Japanese Government Bonds reversed hard causing yields to spike and this morning unemployment was rather disappointing.
According to economic sources, the real unemployment rate hit 11.6% in March. Headline unemployment declined to 7.6%, but this decline was mostly due to unemployed folks leaving the labor force. Some economists think that this is a natural phenomenon during a recovery, but others argue that this time is different. According to the data, the LFPR (Labor force participation rate) is back down to 1979 levels.
Internationally, Japan is starting to make headlines too. Just about all of the investment community knows that Japan’s situation is rather dire, with debt to GDP levels of over 240% and a shrinking population.
The Japanese government has over a quadrillion Yen on their balance sheet. To put this figure into prospective, hedge fund titan Kyle Bass has stated numerous time that if your were to count one Yen per second, it would take you 31 million years to get to a quadrillion Yen. Perhaps the market will soon be a tad more skeptical when analyzing JGBs (Japanese government bonds).
Below is a chart of old Japanese rates.
