The negative yield on a bond essentially means people are paying for the privilege of lending to the Japanese government. With yields now down into the negative territory, it also suggests that there is continued demand for JGBs. Investors’ thirst for JGBs could keep a lid on equities, but obviously the options market sees things differently.
The moves in Japanese debt come just a little over a week after the Bank of Japan surprised markets by adopting negative interest rates. The rising trend for negative yields in developed world government debt has augmented demand for safe-haven assets as investors reassess exposure to riskier assets.
iShares MSCI Japan ETF
