From an investing standpoint you have to get this one right. The bond vigilante paradigm has been false in Japan and now in the US as well. If you had seen rates in Japan at 2% and shorted them saying they would come up, you would have lost your shirt. Conversely, if one uses the currency sovereignty paradigm, the short-JGBs trade is one that one would have avoided.
What a cautious investors should do is shun repressed assets and seek next best alternatives in similar assets classes or in different currencies – corporate over government bonds, Canadian over US, etc. Indonesia, for example is an opportunity.
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