Seeking Alpha

Japan knows deflation, and it's buying Treasurys

  • “There’s tremendous deflationary pressure in the U.S.,” says Mizuho Asset Management fund manager Yusuke Ito. “For bonds, the longer the maturity, the better." As U.S. investors exit duration in the domestic bond market, Japanese investors - to whom the U.S. 10-year yield of 2.84% looks positively towering - are snapping the paper up. The country's holdings of U.S. debt rose $98.2B in Q3, the 2nd largest increase since the data started becoming public 13 years ago.
  • “The Japanese have experience with 15 years of disinflation,” says Hideo Shimomura, chief fund investor at Mitsubishi UFJ. “Now it is spreading to the U.S. It’s worthwhile to take long-end risk in portfolios.”
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Comments (6)
  • jesstown
    , contributor
    Comment (1) | Send Message
     
    Why would anyone who understands what happens when a country goes on a fiat paper currency basis believe that it makes any sense to buy U. S. Treasuries? The U. S. will never pay back any of its debt because it can't and won't. So, people who invest in them deserve what they will eventually get - zilch!

     

    Jesse Townsley
    York, PA
    9 Dec 2013, 02:51 PM Reply Like
  • Hank890
    , contributor
    Comments (1268) | Send Message
     
    Jesse,

     

    Clearly you want our currency to be "fiat" ---but it just isn't.

     

    The debt will be paid back,...with inflated dollars. The inflation will come on the basis of huge increases in key prices for commodities and healthcare, and strong general demand,...but not surplus over-printed currency.
    9 Dec 2013, 05:37 PM Reply Like
  • Peregrinus
    , contributor
    Comments (124) | Send Message
     
    The Japanese don't have a very good track record investing in the US. Remember all that real estate they bought? They currently hold over a trillion in treasuries. They can't sell because it would cause a crash. Why not buy more? Its the best idea they've had since Pearl Harbor.
    9 Dec 2013, 07:13 PM Reply Like
  • notta lackey
    , contributor
    Comments (131) | Send Message
     
    The Japanese buying trillions of treasuries? Sounds like the revenge of the USS Arizona.
    10 Dec 2013, 06:06 AM Reply Like
  • DeepValueLover
    , contributor
    Comments (9398) | Send Message
     
    Deflationary pressure in the U.S.?

     

    ...and people believe that there will be a "taper" in the near future?

     

    Japan will NOT be able to keep the yields on longer dated securities down.

     

    No wage growth in the U.S. but with unending inflation in education and healthcare prices mean the Japanese are dooming themselves with their growing Mt. Everest of U.S. debt.

     

    No way out of this mess.
    10 Dec 2013, 08:44 AM Reply Like
  • thotdoc
    , contributor
    Comments (1826) | Send Message
     
    China is war mongering and Japan is stepping up to support the US government's needs to sell paper.
    10 Dec 2013, 10:16 AM Reply Like
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