With China offline for the rest of the week, global markets have found a new Asian bogeyman in the face of Japan which as reported last night saw its markets crash, and the Yen soar, showing that less than 2 weeks after the BOJ unveiled NIRP, yet another central bank has lost control.
The Nikkei crashed 5.4%, the biggest drop since June 2013, dropping over 900 points to August 24 lows driven by crashing banks, while the Yen soared to 114.50 overnight before the BOJ desperately tried to push the Yen lower, with London dealers reported the BoJ checking rates and levels to prompt short covering through 115.
But while the BOJ failed to push up equities, it certain managed to launch a panic buying spree in JGBs, which as also reported finally slid into negative yield territory, thus boosting the global number of bonds with a negative yield to just shy 30% of total or roughly $7 trillion!
Aside from Japan, everyone is looking at the bank which we first asked if it was "the next Lehman" last June, namely Germany's Deutsche Bank, to see if yesterday'd desperate scramble to publicly confirm it has sufficient liquidity will sufficient will stop the price from dropping and its CDS drom blowing out. For now, the stock is indeed up modestly, even if the CDS has refused to tighten suggesting that whatever management did, it is not enough and it is only a matter of time before the selling returns.
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