The Son of Finance of the Great Age

  Chapter 160 The Japanese Are Coming

Hundreds of billions of dollars, this is just the annual operating income of a top Japanese conglomerate. It is nothing to the United States whose GDP is several times that of Japan, but the account is not calculated in this way. Even the bond market in Europe has greatly increased the cost of financing for domestic companies in the United States through the bond market; secondly, it has shaken the foundation of the income source of the US Treasury Department, making them have to think twice when issuing new bonds; This move made Americans realize that Japan is not their back garden.

When such a report was delivered to the prime minister's desk, Prime Minister Hosokawa just glanced at it roughly, and then ordered his subordinates lightly: "It's not easy to do this in the official name, let those brokers Let’s deal with the bank, the central bank and the Ministry of Finance assist!”

Soon this semi-official plan was sent to various financial institutions in Japan, and the corresponding preparations were also started. The Bank of Japan's intervention in the current situation of high yen value has also gradually weakened. It is all for the yen capital to enter the US market with a larger amount.

  …

After two days of operation, Zhongshi found that the yield rate in the bond futures market still has not changed much. This is not only because of the strong capital strength of the bulls, but also because the market’s expectations for the market outlook have weakened. This is partly due to the Fed’s interest rate hike. In addition, consortiums holding a large number of long-term U.S. treasury bonds cannot let the yield of treasury bonds rise.

Just imagine a large financial institution holding long-term treasury bonds with an underlying amount of one billion U.S. dollars. The amount spent is more than one billion U.S. dollars. Once the yield rises in the futures market, it means that the price of the bonds in their hands will fall. When they When it changes hands, it may only sell for a billion dollars or less, which is a big problem.

  Because of Drexel's extraordinary prosperity in the 1980s, major commercial banks and investment banks on Wall Street all increased their fixed-income business. The so-called fixed income refers to the discount rate that is stipulated before the bond is issued, and the change in the market's expectation of the bond's yield makes the real-time price of these bonds fluctuate, so there is room for trading.

There used to be such a joke that a well-dressed guy with a phone on the subway said "billion", "I buy" and "I sell". This is not their bragging or nerves, but buying and selling bonds over the phone .

   "It took two days to mark the rate of return to a basis point, and this momentum is not good!" Another tens of millions of dollars of funds left the market, but there was still no wave, and Zhong Shi couldn't help feeling a little anxious.

I established a short position of about 20,000 lots in two days, costing more than 50 million U.S. dollars, but the price of the 10-year treasury bond and the 30-year treasury bond still have little change from the price before entering the market. The change is not big, at most a change of one thirty-second point.

After thinking about it for a long time, he didn't have any idea, Zhong Shi simply stopped observing, but picked up the "Wall Street Journal" on the table and read it. This newspaper is basically a daily must-read publication for those engaged in the financial industry, except In addition to the "Wall Street Journal", there are newspapers with great influence like "New York Times" and "Financial Times".

"The Bank of Japan announced today that it will reduce its holdings of U.S. treasury bonds at an appropriate time. The specific time and amount of reduction have not been announced. According to market analysis, this is a response to the U.S. interest rate hike. It is to reduce the negative impact of the recent appreciation of the yen by reducing the holding of US dollar assets..."

"Nomura Securities recently released an analysis report on the Fed's sudden interest rate hike. The report pointed out that according to historical practice, the United States has entered a cycle of interest rate hikes. Although inflation has not yet appeared, Greenspan and his colleagues clearly believe that When it comes time to raise interest rates, it is recommended to reduce holdings of long-term government bonds..."

   "Bank of Tokyo announced that it plans to open branches in 26 cities across the United States in the next three years. Affected by this, the stock of Bank of Tokyo rose by 4.5%..."

"The European bond market has experienced an unusual situation. Although central banks such as France, the United Kingdom, and Germany have announced interest rate cuts, the yields of long-term government bonds have risen against the trend. Some analysts pointed out that brokers are calling for deposits from customers in their seats. Among them, the U.S. Customer oriented..."

  …

"The rain is coming!" After reading the news, Zhong Shi finally figured out what was going on. First, the negotiations between the United States and Japan broke down, and then the United States announced the implementation of the "Super 301" trade terms against Japan. Then the Japanese consortiums looked down on the bond market. There is only one theme behind the intricate news, that is, a contest between the two sides is unfolding in an invisible place.

  He also fully understood why the international bond market collapsed this year when it said it collapsed. The reason is here!

"The U.S. interest rate hike and the yen's appreciation, these two are golden opportunities, and together they constitute the prerequisite for launching a financial war." Zhong Shi muttered, "So it's not just a crisis caused by hedge funds, Rather, there is another force behind it, and it turns out that Japan has exerted the power of the whole country. I don’t know if this is an official move by Japan or the consortium’s own move, but no matter what, there must be expert guidance behind it.”

Zhong Shi's voice was so low that even Louis, who was sitting next to him, couldn't hear clearly. The protagonists of this financial war are the two countries with the most powerful economies in the world, and any financial institutions such as commercial banks and hedge funds are just one of the chess pieces. Unlike Japan, financial institutions in the United States do not necessarily listen to the government and the Federal Reserve, and they might take advantage of this to make things worse.

"Aren't they worried that the collapse of the bond market will impact the local market?" Zhong Shi thought, and suddenly a thought popped into his mind. The rise in yields in the global bond market is bound to affect Japanese bond market, "Louis, do you have any data on the Japanese market in recent months?"

   "This... this may have to be faxed from Hong Kong. After all, we are here to study the U.S. bond market, and there are inevitably omissions in the study of economic fundamentals..." Louis showed embarrassment. He watched Zhong Shi staring at such an ordinary newspaper for a long time, his face fluctuating, and he knew that he must have seen something, but Zhong Shi suddenly asked about Japan's economic data, and he thought for a long time, I didn't expect that Zhong Shi's first sentence would be about Japan.

   "Well, tell the people in Hong Kong to quickly send over the economic data from Japan in the past few months, hurry up!" Zhong Shi frowned, and then asked Louis to notify the people in Hong Kong.

While the two were talking, there was a sudden shout from the trading hall: "There is a big sale order, this... this is a bit too much!" point!" "It has risen, YTM (yield to maturity) has moved, and it has increased by one basis point."

"What's going on here?" Zhong Shi was startled, and looked at the shouting traders in confusion. The ups and downs made him confused for a while, and it took him a while to react. : The bond futures market has received a large amount of sell orders, which actually suppressed the price of the current 10-year treasury bond futures.

Zhong Shi hurried to the nearest computer, leaned closer to the small screen, and saw 34,510 buy orders piled up at the price of 104-26, and suppressed the price of the ten-year treasury bond to 104-26 within a few minutes price.

   "How did such a large number of lots appear? Did it appear all at once or..." Zhong Shi hurriedly asked, such a large number of lots was obviously made by a powerful institution.

"No!" The trader operating the computer replied quickly: "I have been paying attention to the number of lots on this selling order. These 30,000 lots of selling orders appeared one after another, and three buy orders of about 10,000 lots were basically Appears within half a minute, and wipes out all the buy and sell orders and short-changing lots above."

   "Is it possible that this is the rhythm of long positions?" Zhong Shi thought for a while and asked another possibility.

"It should be impossible." The trader replied without thinking: "Such a large-scale liquidation will definitely be caught by the shorts. In the end, it is still a question whether the longs can leave the market!" The problem is that these traders still have a little say.

Zhong Shi's face turned red, but he quickly turned his head away, pretending that he didn't hear what the trader said, and after a pause, he turned his face and continued: "Now we have the Allied Army. In this case, Let's follow them and see what the bulls do next."

  Louis nodded, and ordered loudly: "Everyone, let's continue to open new positions, and add positions to other contracts..."

  Each treasury bond futures contract has a certain period, but the underlying treasury bond varieties are all 10-year, and there are several main contracts, so the weighted rate of return formed is regarded as the long-term interest rate.

  At present, the February contract of Tianyu Fund is one of the main contracts. However, in order to prevent the transfer of the main funds to the contract, or to enter the market too late to open a position, the contracts of other months also have different positions.

With the joining of Tianyu Fund, the shorts are even more powerful. Under the unanimous efforts of the two big shorts, the price of the ten-year treasury bond futures was finally fixed at the price of 104-22 on this day, and the yield also increased by 1 base point.

   "I just don't know if the bulls will counterattack tomorrow?" Lewis smiled after finishing the transaction. This day's transaction made a profit of nearly one million dollars. No wonder he was so happy.

When he turned around to look for Zhong Shi, he found that he was staring at a pile of documents beside the fax machine in a daze. Louis hurried to Zhong Shi's side, and heard Zhong Shi sigh in a low voice: " So that's the case, Little Japan is really deliberate!"

   The 94 bond market crash was written like this for me, sweat~

  (end of this chapter)