The U.S. Yield Curve Has Inverted

Re:The U.S. Yield Curve Has Inverted by Arnt on Tuesday December 04, 2018 @10:34AM (#18600285)

That wasn't my phrasing... but isn't Japan's debt mostly bought by Japanese? https://www.statista.com/statistics/756192/japanese-governme... lists foreigners as holding 5%. From the Japanese point of view, Japanese bonds are extraordinary in that they carry no currency risk.

(Does the central bank usually set the interest rate? Why do lenders accept that decision?)

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Re:The U.S. Yield Curve Has Inverted by RobertoG on Tuesday December 04, 2018 @11:17AM (#18600745)

When you say that Japan's debt is mostly bought by Japanese it sounds like it's a particularity of the Japanese people. That's not the case.

Who is buying that debt is really the Central Bank of Japan, so, it's really a political decision.

Yes, the central bank have a target interest rate and operate to keep it inside their chosen parameters.

Lenders accept that decision because they have not other option.

From http://bilbo.economicoutlook.net/blog/?p=40937 :

"That is what the Japanese experience since the early 1990s tells us. And all the stories about special cases; cultural peculiarities, closed markets, etc that the mainstream economists wheel out when another one of their predictions about how Japan is about to sink into the sea as a result of its public debt levels, or that interest rates are about to go through the roof because of the on-going and substantial fiscal deficits; or that inflation is about to accelerate because of the massive monetary injections; and more, are just smokescreens to divert our attention from the poverty of their analytical framework. The Japanese 10-year bond trade is called the ‘widow maker’ because hedge funds who try to short it lose big [..]"

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