What This Wild Month In Markets Has Exposed
Market Depth
The Short Squeeze in 10 Year JGB Futures
On Friday, March 10th, traders were horribly mistaken of what BOJ is changing or not changing policy based on as BOJ stood pet. The Bank of Japan owned 100% of outstanding supply for many of these particular issuances that futures traders needed in which to deliver. And when B.O.J owns all of an issue, they lend them out and they charge interest to do so. That lending rate was quadrupled from 25 basis points to 1%. So for those scrambling to deliver JGBs, they had to pay up for non-existent supply over the next few days.
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