For 6 months the Japanese jawboning has noticed traders front-managing the BoJ, offering JPY and acquiring whatever danger-asset is the most correlated that working day - regardless of whether it is the Nikkei 225 or the S&P five hundred. Even so, now that words have been replaced by actions, it seems that somebody (cough Japanese establishments cough) has decided the 13.4-sigma here swing in JGBs final night time is just way too significantly and have rotated to US Treasuries. The marketing of JPY and getting of EUR (to fund peripheral bond acquiring) and USD (to fund Treasury getting) is really obvious. That means, implicitly, that every ramp increased in JPY (weaker JPY) is simply a lot more bond-acquiring - which leaves the algos directionless.
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If you were a risk-supervisor, what would you do? And as significantly as all individuals VaR danger types - oops!!
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It looks the 'sellers' of individuals JGBs have identified a new area to put that funds to work (and in a non-devaluing forex)...
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Charts: Bloomberg
Regular:Your rating: None Typical: four.four (eight votes)
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