Extend’s in Japan . . Credit risk climbs




The global stock rout intensified as European index futures indicated shares would add to Monday’s declines and equities in Tokyo slumped by the most since August. The yen reached its strongest since 2014 as Japan’s 10-year yield dropped below zero for the first time and corporate bond risk climbed.  

 – “Investors had probably thought yesterday we might have hit bottom but they’ve been crushed,”  “Greece, Deutsche Bank, shale gas — all we hear is bad news. Investors must have their heads in their hands right now.” said Nobuyuki Fujimoto, a senior market analyst at SBI Securities Co. in Tokyo. 

The distress that has brought global equities to the brink of a bear market in 2016 is flaring in the credit space, with the cost of protecting against company defaults worldwide surging.The yen is rising, meanwhile the U.S treasury are falling and the gold  price are rising too.Basically it’s showing a risk-averse market sentiment, Japan’s Topix index tumbled 5.5 percent in Tokyo, falling the most since Aug. As banks and financial shares led losses. The Nikkei 225 Stock Average dropped 5.4 percent, its biggest decline since June 2013. Government bonds surged, with the yield on 10-year Japanese notes touching minus 0.035 percent in Tokyo. Treasuries also rallied, sending the benchmark 10-year yield for U.S. debt to a one-year low of 1.68 percent. The rate has dropped 58 basis points since Dec. 31, the strongest rally by this time of year since a 71 basis point slide to Feb. 9, 1988.

People immediately thought there’s a problem where banks can’t pay and they can’t fund themselves to pay. It does feel like we’re reaching a point where the market is panicked.