Japan Could Face Bond Default

Tres Knippa believes the troubles in Japan are far worse than they seem, and the fund manager has backed up his pessimism in the form of a leveraged short position against Japanese government bonds.

“They’re going to have a default,” Knippa told CNBC on Tuesday during an interview with “Squawk on the Street.”

Knippa, who runs Kenai Capital Management in Chicago, foresees Japanese officials accelerating debt problems in an ill-fated attempt to protect the country from a bond crisis. If the yen weakens enough, Japanese government bond holders won’t hold onto those securities as returns decline along with the yen, he said.

His comments came after Japan’s Nikkei stock index ended Tuesday about 14 percent down for the year. Knippa joins noted hedge fund manager Kyle Bass in his opinion on a looming Japanese debt crisis. driven by a stagnant economy and rapidly aging population.

via CNBC

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Alfonso Esparza

Alfonso Esparza

Senior Currency Analyst at Market Pulse
Alfonso Esparza specializes in macro forex strategies for North American and major currency pairs. Upon joining OANDA in 2007, Alfonso Esparza established the MarketPulseFX blog and he has since written extensively about central banks and global economic and political trends. Alfonso has also worked as a professional currency trader focused on North America and emerging markets. He has been published by The MarketWatch, Reuters, the Wall Street Journal and The Globe and Mail, and he also appears regularly as a guest commentator on networks including Bloomberg and BNN. He holds a finance degree from the Monterrey Institute of Technology and Higher Education (ITESM) and an MBA with a specialization on financial engineering and marketing from the University of Toronto.
Alfonso Esparza