Japan was surprised the markets with less hawkish 7-2 vote to hike 25bps. Indicating uncertainty and maybe prolonged period of 1.25% before the next possible hike.
Compared that to the US which is expected to hike again in Oct and perhaps again in early 2027.
Yen is weakening!
BOJ is up next (tonight/overnight ET time). They will also hike 25bps. Putting them just inline with US and other G7 central banks recent actions.
Net-net, not marginally better tmr vs last month. Should we expect Yen weakness to continue? Or will they say or do something BIG?
Ex-FOMC Miran is rationalizing that Fed shouldn’t hike on CNBC now (11:08am). Current members can’t make any public statements so I find it very interesting when ex-Fed speak especially when market has a very strong view of near term FOMC action!
Markets seem to be done positioning/re-positioning ahead of tmr FOMC decision.
10yr Tsy yields topped out at 5.04% and is straddling close to 5%.
CL oil futures topped out $104.95 and been largely consolidating since Thu’s breakout.
Kalshi has 25bp hike at 87%
2/
Perhaps Warsh won’t disappoint markets (that is markets own him; instead of him leading Fed that in turn lead the markets).
But perhaps he will want to show that markets shouldn’t expect to sway him away from the mild inflation data we had last week.
No stopping it!
Oil climbed all day and future are over $104!
Tsy yields also didn’t stop climbing and is now less than 4bps from 5%! Maybe I’m wrong and we might get over 5% tomorrow or well ahead of FOMC!
JPY .. what level will we see Yen carry trade unwind debacle?
Despite the doomers, we still aren’t seeing any major (ie greater than 7% drop) U.S. stock market impact from Yen strengthening.
Week is starting w/ mixed signals
BEARISH (for risk assets)
* Stocks down: memory, ai chips (other than NVDA), quantum
* Bonds up
BULLISH
* Cryptos up
* Gold up
* Oil down
* $NVDA (earnings wed)
* Beat down tech $NFLX, $META, $HOOD