Stress scenarios for 
Japanese bond yields

Oleg Ruban at MSCI finds that the stories behind yield rises in Japanese government bonds matter greatly. They influence the correlation between Japanese equities and government bonds, which is crucial in determining the size and direction of the impact of these scenarios on representative portfolios in different geographical segments and asset classes.

Why does this matter? It’s that old gem interconnectedness again: as the tsunami illustrated begins in Japan and roils around the Pacific, turmoil in the Japanese government bond market effects, at first, bond and equity markets in the Asia-Pacific region. As these markets are so inextricably connected to markets around the world, the impact is then felt globally.

You need to know about that. Read the whole story here.

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