JGBs running dry, sparks speculation of zero coupon perpetuity

07 April 2016

 

The law of unintended consequences has reared its head yet again. The Bank of Japan (BoJ) has a set target of purchasing $80 trillion yen (AUD$1 trillion) worth of Japanese Government Bonds (JGBs) per year. In buying JGBs from investors in the secondary market, the central bank hopes two things will happen. First, investors will have more cash and thus are more likely to spend it on goods and services...

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