Always consider hidden risks
The Japanese Year End : Window Dressing Over, Sell those Japanese Assets !
( From Barchart, TradingEconomics )
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The Japanese end of the year for most of the Japanese Financial Institutions ( Fiscal Year ) are March 31. And each year beginning 2 or 3 weeks earlier are the window dressing process where rapatriation of assets migration start. Japanese Institutions are selling foreign assets ( mainly US assets ) to come back into Japanese assets.That process put the Japanese assets on the expansive side at the end of march as we will see below...
It is very interesting to observe that both Japanese bonds and stocks performed extremely well in march : it is the window dressing effect. Now we should expect that some of those gains will be given back...
Japan Government Bond 10Y Yields
Japanese Bonds : JGB s
The most obvious one is the yield on Japanese 10 year bonds : it went from 80 basis points in yield at the beginning of march to a low close on march 28 of 51 basis points in yield. That should reverse and come back into the normal range of 70 to 80 basis points in the next few weeks...
The Japanese stock market went from around 11 400 level at the beginning of march to close march 29 at 12 400. We should expect some selling within the next 2 or 3 weeks to bring it back around the 11 800 level...
The migration process of selling foreign assets and bring it back to Japanese assets tend to strengthen the Yen as we may observe on the chart below...The Yen gained 3 figure from the top...