Intriguing RV graphs: Structural changes for "oligopolistic" JGB market
Key points
- We analyzed diversity of JGB market using Herfindahl-Hirschman Index (HHI), which measures degree of industry oligopoly/monopoly
- HHI has been rising in recent years (= ongoing oligopolization of JGB market); trading activity heavily skewed toward overseas investors; could be factor contributing to increased yield volatility
- While launch of Japan's new administration may stabilize markets over short term, if oligopolistic tendencies persist, environment may remain conducive to rising volatility