Japan government bond market dysfunction
June 2, 2021 (Wednesday) cloudy turning to sunny; Mercury retrograde (May 30–June 23)
- The government sees the secure supply of COVID-19 vaccines for the elderly as on track and will begin full-scale vaccination for the general population aged 12–64.
Because by the end of June there will be about 50 million doses in surplus, from the 21st, corporations and universities will also have industrial physicians administer vaccines.
Toyota <7203> [Closing price 9,423 yen] JR East <9020> [Closing price 7,679 yen] Rakuten <4755> [Closing price 1,253 yen] Nippon Yusen <9101> [Closing price 4,615 yen]
Japan Airlines <9201> [Closing price 2,513 yen] Sony Group <6758> [Closing price 10,830 yen] Komatsu <6301> [Closing price 3,247.0 yen] Itochu Shōji <8001> [Closing price 3,260.0 yen]
Seven-Eleven Japan <3382> [Closing price 4,683 yen] Mitsubishi Chemical <4188> [Closing price 887.6 yen] and other companies are also under consideration.
- Vaccination of people under 64 years old is set to begin in some areas, including Tokyo's 23 wards, within June.
Within the month, at least 14 wards will send out vaccination tickets, and among them Sumida, Nakano, Toshima, Nerima, and Setagaya will begin vaccinations.
- The Ministry of Health, Labour and Welfare announced on the 1st that it will start distributing Pfizer's COVID-19 vaccine to municipalities for一般接種 (general vaccination for those under 64) from July.
Over two weeks from 7/5 and from 7/19, 11.7 million doses will be distributed in each period.
Combined with the US-made Moderna vaccines administered at workplaces, general vaccination will intensify.
- The Government's Regulatory Reform Promotion Council submitted a report to Prime Minister Yoshihide Suga on the 1st.
It set a goal to online 98% of about 22,000 administrative procedures by 2025 and called for cashless payments support.
The report urged advancing digitization across a wide range of fields.
The issue of permanent online medical consultations was not concluded. The report only notes it will be sketched out by summer.
- KDDI <9433> [Closing price 3,663 yen] formed a capital and business alliance with Menu, a major meal delivery service in Japan (Tokyo, Shinjuku); will invest about 5 billion yen for 20% stake.
This will be used to expand smartphone payment services leveraging order data.
...
- The government targets to switch all new light commercial vehicles (trucks, etc.) to electric vehicles (EVs) or fuel cell vehicles (FCVs) by 2040, and to make all new passenger cars electric by 35 years from now.
...
In commercial vehicles as well, to advance decarbonization and achieve near-zero greenhouse gas emissions by 2050.
- The COVID-19 crisis is directly hitting the profitability of the lodging and food service industries.
The Ministry of Finance on the 1st reported that operating profits for corporate sectors in January–March rose 26% year-on-year, but
the lodging and food service industries and living-related service industries remain in the red.
The three industries are increasing cash and deposits by 30–50% as a defensive measure to bolster liquidity.
Sales of lodging have halved from the previous year, dining services are down 17%, and living-related services down 16%, with the heaviest impact on those most affected by the pandemic.
Manufacturing saw a 1% drop in sales, but non-manufacturing fell more sharply by 4%.
- To prevent advanced technologies such as semiconductors and AI from being militarized,
the government will work with the United States and other major European nations to develop a new framework for export controls.
It has already approached the United States and aims to realize this within fiscal year 2021.
- Tarō Kōno, Minister in Charge of Regulatory Reform, on the 1st, reported on what regulations should be reviewed toward achieving a decarbonized society, aligning with the Regulatory Reform Promotion Council's conclusion.
He set goals to promote the use of natural parks and to double geothermal power facilities by 2030.
These moves aim to expand renewable energy.
- Chiba Bank <8331> [Closing price 704 yen] Niigata K-? Hokushin Bank <7327> [Closing price 2,390 yen] Okayama Bank <8382> [Closing price 865 yen]
Nomura HD <8604> [Closing price 596.5 yen] will create a new company to advise individuals on investments.
Launching with a stance of "remote" and "neutral," planning to begin operations as soon as next spring.
- The dysfunction of Japan's government bond market is serious.
In May, interdealer trading volume of 10-year Treasuries was at about a 21-year low, and on June 1 trading did not occur for the first time in about 11 months.
Trading did not occur on several days for various maturities including 2-year and 20-year bonds.
- Nojima <7419> [Closing price 3,005 yen] President Koji Nojima said on the 1st that
Suruga Bank <8358> [Closing price 359 yen] Vice Chairman (part-time, outside) will resign before the term ends in June.
Mr. Nojima offered to resign to make a clear stance against the company at the June shareholders meeting.
- Chinese authorities have begun curbing the yuan's appreciation. On May 31, the People's Bank of China announced an increase in foreign exchange reserve requirements for the first time in 14 years.
This aims to reduce foreign currency circulating in the market and curb currency conversion from foreign currencies to yuan.
The intention is to weaken yuan appreciation pressure and ease the burden on exports, a growth engine.
- Tin prices are rising.
London Metal Exchange (LME) nickel? Wait, tin futures rose to 39,900 USD per ton as of January 1 Japan time, a fresh high not seen since April 2011.
Increased demand for solder used in manufacturing of communication devices.
In Congo, which accounts for about 8% of global production, the Nyiragongo volcano erupted in late May. There is a risk of further eruptions, and many people are still evacuating from the city near the volcano, Goma.
- The month’s decline in Bitcoin, a representative cryptocurrency, was the largest in 3 years 2 months since March 2018.
Regulations in China targeting mining and trading,
and Tesla's suspension of Bitcoin payments citing energy use, contributed to the drop.
From around $58,000 at the start of the month to near $30,000 at one point, and around $36,000 currently in trading.
- LNG imports are accelerating in Southeast Asia.
First Gen, a major Philippine power company, announced it will commence construction in June 2021 in preparation for imports in 2022.
In Thailand, imports will be opened to the private sector, and power companies are moving to procure.
Going forward, demand and market conditions are expected to be significantly affected alongside China.
- A rise in the number of “small tycoons” in China.
There are more than 1.13 hundred million adults with net assets over $100,000, surpassing the United States to become the largest in the world.
As of 2019, adults with net assets over $100,000 totaled about 113 million, ranking in the top 10% of the country, surpassing the United States’ 100 million.
- As of 4:00 PM on June 1, global COVID-19 infection numbers (deaths in parentheses) summarized by Johns Hopkins University: World total 107.2 million cases (8,379 deaths)
United States 33,264,415 (137) India 28,175,044 (2,795) Brazil 16,545,554 (860) France 5,728,788 (128) Turkey 5,249,404 (122) Russia 5,013,512 (334)
United Kingdom 4,503,231 (2) Italy 4,217,821 (82) Argentina 3,781,784 (637) Germany 3,689,921 (154) Spain 3,678,390 (48) Colombia 3,406,456 (492)
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6/5 (Sat) [Korona Asa Seminar] June Special Edition The God of Market Fortune Arrives (Tokyo, Shinjuku)
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