Stars Aligning for Northern Star, page-19

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Central Banks running out of bonds to buy.....so they are buying equities

BOJ Cornered as Japanese Banks Running Out of Bonds to Sell

Japan’s biggest banks are running out of room to sell their government bond holdings, pushing the central bank closer to the limits of its record monetary easing.

http://www.bloomberg.com/news/artic...anese-banks-seen-running-out-of-bonds-to-sell


Europe Central Bank running out of bonds to buy.....from the Wall Street Journal

Extract from the main part

It had already bought so many government bonds that it was running out of things to purchase.

The European Central Bank’s corporate-bond-buying program has stirred so much action in credit markets that some investment banks and companies are creating new debt especially for the central bank to buy.

In two instances, the ECB has bought bonds directly from European companies through so-called private placements, in which debt is sold to a tight circle of buyers without the formality of a wider auction.
It is a startling example of how banks and companies are quickly adapting to the extremes of monetary policy in what is an already unconventional age. In the past decade, wide-scale purchases of government bonds—a bid to lower the cost of borrowing in the economy and persuade investors to take more risk—have become commonplace. Central banks more recently have moved to negative interest rates, flipping on their head the ancient customs of money lending. Now, they are all but inviting private actors to concoct specific things for them to buy so they can continue pumping money into the financial system.

The ECB doesn’t directly instruct companies to create specific bonds. But it makes plain that it is an eager purchaser, and it lays out the specifics of its wish list. And the ECB isn’t alone: The Bank of Japan said late last year it would buy exchange-traded funds comprising shares of companies that spend a growing amount on “physical and human capital,” essentially steering fund managers to make such ETFs available to buy.

The furious central-bank buying has been a relief to companies and governments that can now borrow at rock-bottom interest rates. But it has also spurred criticism that the extreme policies are killing the returns available to other investors, such as pension funds, and loading up the economy and financial system with potentially overpriced debt.

The ECB was late to the central-bank party—it began quantitative easing only in 2015, years after the U.S., the U.K. and Japan—but it has embraced bond-buying with fervor. In March, it boosted its purchases to €80 billion ($90.6 billion) a month from €60 billion and surprised investors by saying it would soon add corporate bonds to its shopping list.

It had already bought so many government bonds that it was running out of things to purchase.

The ECB had bought more than €16 billion of corporate bonds as of Aug. 12, according to the latest available data from the central bank, after starting purchases in early June. The lion’s share has been already-issued bonds trading in secondary markets, but some has come in new debt sales, according to the ECB.

http://www.wsj.com/articles/sellers...uild-bonds-for-central-bank-to-buy-1471815100