A HOLIDAY WEEK MEETS FEAR

There's greed and there's fear. Fear is suppose to have a 2:1 motivating factor over greed. But those are relative ratios and fear once unleashed causes stampedes.

Here's a Reuter's account of what happened overnight in a holiday-limited week in Asia.

Asian share markets were scorched on Tuesday as stability concerns put a torch to European bank stocks and sent investors stampeding to only the safest of safe haven assets.
As fear overwhelmed greed, yields on longer-term Japanese bonds hit zero for the first time ever, the yen surged to a 15-month peak and gold reached its most precious since June.
Japanese Finance Minister Taro Aso felt moved enough to warn the yen's rise was "rough", something of an understatement as the Nikkei nosedived 4.9 percent.

MSCI's broadest index of Asia-Pacific shares outside Japan fell 1 percent, and would have been lower if not for holidays in many centres.
 
"Sentiment towards risk assets remained extremely bearish and price action reflected a market that may be capitulating," said Jo Masters, a senior economist at ANZ.

All of which magnified the stakes for Federal Reserve Chair Janet Yellen's testimony this week.
"She needs to come across as optimistic without being too hawkish and cautious without being negative," said Masters. "Hawkishness or dovishness could easily exacerbate the current sell-off, tightening financial conditions further."

We recently wrote about those European banks in financialspuds.blogspot.com/2016/01/upset people. 

The 'fear factor' in markets has morphed from being about an emerging market hard-landing and collapsing oil prices to being about the extent of the slowdown in the developed world and the ability of central banks to reflate asset values yet again," said analysts at Citi in a note.
The Bank of Japan's recent shift to negative rates has fuelled concerns that ever-more exotic monetary policy is rapidly reaching the point of diminishing returns.

Yet murmurings about the risk of recession in the United Sates has also led investors to wager the Federal Reserve will have to slow, or suspend altogether, plans to normalise rates.

 As noted below the yield on the 10-year Japan government bond dropped below zero for the first time ever, proving once again an old saying it ain't over until it's over.

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Yields on Japan's benchmark 10-year government bond fell below zero for the first time, as investors clamored for safe-haven assets in the wake of a global market rout. 

The yield on the 10-year Japan government bond (JGB) dropped as low as negative 0.007 percent. The fall came on the heels of a global stock market sell-off overnight that likely spurred safe haven flows back into Japan. Bond prices move inversely to yields. 

The U.S. five-year Treasury yield also fell to around 1.1112 percent in Asia trading hours, its lowest since June 2013, when markets convulsed during the taper tantrum after the U.S. Federal Reserve first broached the idea that it would taper its quantitative easing program. The U.S. 10-year Treasury yield fell as low as levels around 1.6947 percent, a more than one-year low, on Tuesday.

The 10-year JGB's move to negative territory yield also follows the Bank of Japan's (BOJ) move to a negative interest rate policy, which can make the return on JGBs, even at a negative yields, as well as the possibility of further price rises, comparatively more attractive. 

cnbc.com/2016/02/08/yield-on-10-year-japan-government-bond-jgb-hits-zero-for-first-time.