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Treasuries Now a Losing Proposition for Their Biggest Global Fan

  • Yen-hedged yield on benchmark Treasuries falls below zero
  • Japanese investors have been selling down overseas bonds

As Treasuries rally in the wake of mounting fears the world’s largest economy is heading for recession, expected returns continue to worsen for their biggest backers -- Japanese investors. 

A combination of sliding US yields and the spiraling cost to hedge the volatile yen now means a Japanese investor will lose money if they wish to take part in what some have dubbed the recession trade. The yen-hedged yield on 10-year Treasuries fell below zero on Thursday, the first time that’s occurred in two years.