Outside the Bank of Japan (BOJ) headquarters in Tokyo on Sept. 14.

Photographer: Kiyoshi Ota/Bloomberg

The Bank of Japan’s escalating presence in almost every corner of the nation’s financial markets threatens to further distort activity and complicate any future pulling back from stimulus.

The central bank’s growing pile of assets has now reached the equivalent of 137% of gross domestic product, according to a Bloomberg calculation based on official data. In dollar terms, the tally of securities, loans and other assets is just 8% smaller than the Federal Reserve’s even though the U.S. economy is four times bigger than Japan’s.

While economists laud the relative success of the BOJ’s measures to support businesses and the economy through the Covid-19 crisis, many of them also warn that accelerated growth in the bank’s asset mountain will be hard to scale back in the future without unnerving investors and shocking loan-dependent companies and policy makers.

With its array of corporate debt and commercial paper quickly building, the BOJ’s “whale in the pond” presence is also spreading beyond government bonds and stock funds to distort other markets and further crowd out private investors.

“It’s like the BOJ has created an intensive care unit and wheeled everybody inside. It’s so comfortable on the drip feed that no one wants to leave,” said Takahiro Sekido, chief Japan strategist at MUFG Bank Ltd.

BOJ's asset haul is larger than Fed's by the size of an economy

The BOJ aggressively ramped up its lending and asset buying in March as the looming scale of the pandemic spread jitters among investors and businesses.

Given the already bloated size of the BOJ’s assets, the pace of increase appeared smaller in scale than its global peers, especially compared with the Federal Reserve. That partly reflects the Fed’s efforts to trim back earlier stimulus, something the BOJ was unable to do and

(Bloomberg) — An upcoming surge in euro-area bond sales should be more than swept up by the record amount cash of sitting idly in the economy, potentially adding fuel to the rally sweeping across the region’s debt markets.

Next week, bond offerings in the eurozone are expected to rise five-fold, with Germany, Italy and France, among others issuing a combined 30 billion euros ($35.4 billion) worth of securities, according to Commerzbank AG. That’s still less than the amount of debt coming due.

The supply also comes as excess liquidity in the euro area ballooned past the 3-trillion-euro mark for the first time ever last week, thanks to unprecedented support from the European Central Bank.



chart: Italy sells debt next week with yields at record lows


© Bloomberg
Italy sells debt next week with yields at record lows

The monetary authority’s liquidity injections have already pushed yields on some of the region’s riskiest borrowers to record lows. With speculation now growing that the ECB will expand and extend its program in December, demand for euro-area debt could prove solid at the auctions, spurring the next leg of the rally.

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“The period from now until year-end does provide a fertile backdrop for further spread compression,” UBS Group AG strategists including Rohan Khanna wrote in a note to clients, referring to the yield premium between peripheral debt and German bunds.

While U.S. election uncertainty could lead to some volatility, “the ECB has enough firepower to fight against any unwarranted widening in spreads,” Khanna said.

Read More: Corporate America Puts $2 Trillion in Bank in Run-Up to Election

Offering additional support will be around 41 billion euros of redemptions from Germany, Italy and Ireland, which will need to be reinvested. Meanwhile, coupon payments from these three nations and Portugal will total over 1 billion euros next week.

Budgets, Brexit

National finances will also

This Tuesday marked 67 days of darkness for Kenneth Parson. He fell behind on his utility bills in the spring — and his lights went off, and stayed off, starting at the end of July.

No power meant no refrigerator, so Parson, a 62-year-old with diabetes in Griffin, Ga., had no choice but to store his temperature-sensitive insulin on ice in a small cooler. He didn’t have an easy way to cook at home, either, so his wife, Cheryl, took to preparing some meals for him in a neighbor’s kitchen.

In those first few days after they lost electricity, Cheryl had pleaded on Parson’s behalf with city officials who manage their local utilities, hoping she might change their minds in the middle of a pandemic that has left families nationwide struggling to cover their once-manageable costs of living.

“They said they couldn’t do nothing for him,” lamented Cheryl, 65, who lives apart from her husband but remains married and helps him manage his health conditions. “It peeved me off.”

The worst economic crisis in more than a generation has thrust potentially millions of Americans across the country into a similar, sudden peril: Cash-strapped, and in some cases still unemployed, they have fallen far behind on their electricity, water and gas bills, staring down the prospect of potential utility shut-offs and fast-growing debts they may never be able to repay.

At the start of the coronavirus pandemic, many states acted quickly to ensure their residents would not lose their power or other utilities if their jobs or wages were slashed. Now, however, only 21 states and the District of Columbia still have such disconnection bans in place.

That leaves roughly 179 million Americans at risk of losing service even as the economy continues sputtering, according to the National Energy Assistance Directors’

By Dhara Ranasinghe

LONDON, Oct 2 (Reuters)The pile of negative yielding euro zone government bonds rose in September to just over 6 trillion euros from around 5.4 trillion a month earlier, Tradeweb data showed on Friday, the latest sign that global uncertainty has renewed demand for safe assets.

A rise in COVID-19 cases in Europe, concern about the economic outlook and unease ahead of a looming U.S. election has pushed down sovereign bond yields globally.

In Europe, where 10-year German bond yields notched up their biggest monthly fall in five months in September, that has meant an even deeper push into negative-yield territory DE10YT=RR.

According to Tradeweb data, around 68.6% or just over 6 trillion euros of the 8.9 trillion euro government bond market had negative yields as of the end of September.

That was up from around 62% at the end of August and marked the highest share of negative-yielding debt on the platform since September 2019.

“Euro rates are moving lower again and there are lots of reasons for that but a big one is that inflation and inflation expectations are weak and that’s increasing expectations for more ECB easing and cementing the negative-yielding bond pile,” said Antoine Bouvet, senior rates strategist at ING.

The pool of negative-yielding investment grade corporate bonds also rose to stand at around 997 billion euros as of the end of September, or nearly 29% of a total market worth around 3.4 trillion euros, Tradeweb said. That was up from 872 billion euros as of the end of August.

Roughly 49% or 1.2 trillion pounds ($1.55 trillion) of UK government bonds traded on the Tradeweb platform of a total market worth almost 2.5 trillion pounds had negative yields as of end-September. That was up marginally from August.

Euro zone