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🛋 | [Flat 2020 interest rate forecast] Interest rate trends in December 12, affected by the change of government in the US presidential election


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[Flat 2020 interest rate forecast] Interest rate trends in December 12, affected by the change of government in the US presidential election

 
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Investors buy JGBs as safe assets, so their coupon rate tends to be linked to the yield on 10-year government bonds (long-term interest rate).
 

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Long-term interest rate

Long-term interest rateWhat is (Famine)?redemptionLong periodBondAnd financial assets and liabilities with long maturitiesinterest rate.. The short term is less than one year, and the long term is often one year or more. Closest to 1 years remainingGovernment bondIs a typical long-term interest rate in Japan.

Overview

Long-term interest rates have several characteristics because of their long redemption period.

  1. It depends on the forecast of price fluctuations.
  2. Long term, such as mortgageLoanIt becomes the standard of interest rate.

Determinants of long-term interest rates

The relationship between the interest rate of a financial asset and the period until maturity is called the term structure of the interest rate. If future short-term interest rate movements are completely predictable, the term structure of current interest rates should be determined by future short-term interest rate movements. For example, when investing 10-year funds, there are two methods, one is to invest in government bonds with a maturity of 10 years, and the other is to purchase government bonds with a maturity of one year and switch every year. If either investment method is advantageous, , No one should operate the rest of the way. In this sense, the long-term interest rate is considered to be the average of the short-term interest rates for the investment period. This way of thinking is the expected hypothesis regarding the term structure of interest rates.

In reality, future short-term interest rate movements are only expectations, so after 10 years, the average short-term interest rate during that period may not always match the current 10-year long-term interest rate. In addition, there is a risk of losing another investment opportunity by fixing funds for a long period of time, and there is a possibility that the government will not be able to recover funds due to financial collapse during the investment period. Therefore, the long-term interest rate is considered to be determined by adding the risk premium to the average expected short-term interest rate.

As mentioned above, long-term interest rates are influenced by forecasts of future price fluctuations because if the inflation rate rises, the BOJ will tighten monetary policy to curb inflation, and short-term interest rates will rise.

There is a market division hypothesis as a decision theory of long-term interest rates other than the expected hypothesis.

History

Long-term interest rates have reflected history in order to make future predictions.

1619,イタリア OfGenoaThe 1.125% interest rate set in was the lowest long-term interest rate in history for a long time, but in June 1998Bubble burstWas experiencing a long recession laterJapanInJapanese Government BondInterest rate fell below 1% and set a new record[1].. Furthermore, interest rates continued to decline,2003/6Dropped to 0.43%.

20151/20, The yield of newly issued 10-year government bonds, which is an indicator of Japan's long-term interest rate in the Tokyo bond market, temporarily reached 0.195%, reaching the 0.1% level for the first time.[2].

2016In February, the yield on newly issued 2-year government bonds, which is an indicator of Japan's long-term interest rates, temporarily fell to minus 10% in the Tokyo bond market for the first time.[3].

Changes in JGB Yields in Japan

Changes in applicant yields for 10-year government bonds (see the Ministry of Finance website)[4].. About the closing price Before 1997, the closing price of the 10-year longest-term government bond listed on the Tokyo Stock Exchange, and after 1998, the closing price of the newly issued 10-year government bond distribution yield.[5].

YearsAnnual average (%)Closing price (%)
19666.86
19676.96
19687.00
19697.01
19707.07
19717.09
19726.71
19738.19
19748.42
19758.53
19768.61
19776.40
19786.40
19799.15
19808.86
19818.12
19827.67
19837.36
19846.65
19855.87
19865.82
19875.61
19884.57
19895.0115.75
19906.7466.41
19916.3165.51
19925.2664.77
19934.2883.32
19944.2194.57
19953.4733.19
19963.1322.76
19972.3641.91
19981.5181.97
19991.7321.64
20001.7101.64
20011.2931.36
20021.2780.90
20030.9881.36
20041.4981.43
20051.3611.47
20061.7511.67
20071.6971.50
20081.5151.16
20091.3581.28
20101.1871.11
20111.1470.98
20120.8600.79
20130.7210.73
20140.5650.33
20150.380.27
2016-0.031 qualifying.0.04
20170.04
2018-0.01 qualifying.
2019-0.025 qualifying.

footnote

  1. ^ Mizuho Research Institute, "Economics in Three Hours-Points to Know", Nikkei Business Newspaper, Nikkei Business Bunko, 3, p. 2002.
  2. ^ Long-term interest rates: first fall in the 0.1% rangeMainichi Newspaper March 2015, 1
  3. ^ [Market Eye] Interest rates: Government bond futures continue to grow, long-term interest rates are at minus 0.035%, the lowest ever Reuters February 2016, 2
  4. ^ Reference Room Government Bond Yield (Applicant Yield)Pmas February 2014, 2
  5. ^ Long-term economic statistics Finance (1/1)Cabinet Office

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