Parallel with japanese crisis from yield viewpoint
Let’s consider the comparison between the Japanese crisis and what we are living in the Occident from “the bond market” viewpoint..
We know that the beginning of the long crisis in Japan came from the burst of the housing bubble.
The reaction of the Japanese central bank (BOJ) was to lower interest rates thus causing a steady rise of government bonds values and yield reduction.
The rates reached zero value so it was logical thinking that they could only rise again in the future.
Those who bet on an imminent rise of interest rates and a decline of the bonds value lost a lot of money, in fact today, after 26 years, the rates are worst than zero, they are negative.
Only if you know history you can frame the situation and make the right investment choice!
In the following chart you can see the main occidental economies bond rate trend related to the Japanese government bonds.
Curves overlapping leaves no doubt!
The Occident is experiencing what happened in Japan in the last twenty years.
Therefore, can we imagine interests rate and bond yield rise in the next years?
The answer is NO!
The chart gives us more interesting information