Yes, Desk Head Ooba. Surplus capital is accumulating rapidly across the short-term money market, and overnight rates are dropping disorderly. The market's supply-demand balance has broken down, and rate-drop pressure has reached a critical threshold. Leaving it unattended at this level is dangerous in the extreme, threatening to paralyze market functionality. (N1 lesson 12)
Yes. Arbitrage between government bond issues of different maturities no longer works, and the curve has lost its continuity. The market's price discovery has fallen into dysfunction, and with its reliability as a benchmark gone, I have to say it is unsound in the extreme as financial infrastructure. (N1 lesson 25)
Yes. Daily trading volume depends on sporadic deals, and the coefficient of variation, which shows how lopsided the buy and sell sides of the book are, has broken into the danger zone. That the fragility of our financial infrastructure's foundation lies this exposed is a situation deeply worrying in the extreme. (N1 lesson 44)
Exactly. High-frequency arbitrage is rampant, exploiting the tiny communication delay between the Tokyo and London markets and feeding on the legitimate trades of individuals and ordinary companies. Trading that badly obstructs fair price formation and creates artificial distortions in the market can only be called unfair in the extreme. (N1 lesson 69)
Confirmed, Desk Head Ooba. Demand for dollar funding from domestic institutions and asset managers has surged, pushing the required funding premium beyond its critical threshold. The market supply-demand asymmetry is dangerous in the extreme! (N1 lesson 86)
Starting the simulation! With the trunk lines down, transactions from every financial institution are hit by serious transmission failures. Automatic matching has stopped, and the floor is gripped by the tensest, most uneasy atmosphere! (N1 lesson 53)
