Yen interbank funding market calm as government bond yields retrace

The reduced scale of hedge fund carry trade activities compared with previous crises such as the collapse of Lehman Brothers in 2008 has reined in potential increases in the yen libor rate and short-end JGBs.


The reaction by fixed-income investors towards the impact of the Tohoku Pacific coast earthquake, tsunami and subsequent radiation leak from a nuclear power plant in Fukushima prefecture has proven relatively calm during the past week, as better money market conditions, compared to the 2008 turmoil exacerbated by Lehman Brother collapse, has helped stabilised Japan government bond (JGB) yields.

The relatively insignificant movement of yen-libor, a fixing which represents offshore interbank

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