Uridashi - The Most Important Bond Market You Never Heard Of!
2/9/2016
Summary
This analysis contains data and information about Uridashi Bonds, an important vehicle for capital export by Japanese investors, and one of 4 components that I have identified so far of the retail Yen Carry trade.
I stumbled into this type of securities in my hunt for Mrs. Watanbe, the mythical and elusive Japanese housewife that invests all her savings overseas in an attempt to escape from the yoke of an oppressive Zero Interest Rate Policy conducted by the BOJ. In a victory for Micro Economics over Macro Economics, the Japanese investor refused to succumb to low rates and instead chased returns globally, exporting Money Supply, resulting in massive asset inflation in the rest of the world, and deflation in Japan.
This data is helping me tie out the amount of capital exported by Japan, to prove a hypothesis I proposed in a previous Crisis Note, that Monetary Policy failed globally when Japan entered its Liquidity Trap.
The proof will be in a forthcoming analysis of Macro Economics and The Carry Trade. Stay tuned.
I have mentioned in previous Crisis Notes that the best sources for information on the Yen Carry Trade, and the Financial Crisis in general, were Australian and New Zealand newpapers. In my hunt for the elusive Mrs. Watanabe and the channels by which she funded the US economy, I stumbled across this wonderful link from New Zealand, which also directed me to New Zealand's Central Bank. Who knew that Central Banks knew what was happening in their country!
https://en.wikipedia.org/wiki/Uridashi_bonds
http://www.financialsense.com/contributors/john-needham/uridashi-the-bubble-buster
http://www.bloomberg.com/bw/articles/2013-01-24/japans-bond-investors-like-to-buy-foreign
Information on this market is sparce, therefore I am putting on display some views of the data I have collected.
I had to beg for mercy from Bloomberg after maxing out my data limits downloading the data I needed this for research. With some help, I managed to get more data to allow this research on Uridashi bonds to be completed. Thank you Roland Dickens and Marc Silie!
I am paraphrasing numerous sources, including those linked above in this first section.