acrossthespread

acrossthespread

Since the Bank of Japan shocked global markets in December ‘22 by widening the Yield Curve Control trading band on 10Y JGB yields from 0.25% → 0.5%, TOPIX Banks have been on a one-way surge upward. TSE:T17B index rallied +7% on the day of the policy meeting, and +25% within days thereafter. The three Japanese mega banks Mitsubishi UFG (TSE:8306, NYSE:MUFG),...

acrossthespread

10y UST yields are collapsing. Why. According to financial media - nothing. "Things look gloomy." "Upside on economic rebound priced in." "Supply/demand for USTs" (that last one is technically correct, but is so incredibly basic/generic that it can be categorized under the same → you people have no idea why, and you're just talking for the sake of talking.) So...

acrossthespread Updated 

Turkey is in (continued) currency crisis. CBRT (Cent Bank Repub Turkey) has allegedly run dry of its FX reserves to prop up the lira, which has has been hitting all time record lows vs USD & EUR. As USDTRY broke through the psychological 7 level (and doing so against a weakening dollar at that) in July, CBRT more or less threw in the towel in defending the peg,...

acrossthespread

(see prev post) Turkish Lira in crisis, weakening to record lows vs USD & EUR. USDTRY threatening to break above 7 (and eventually doing so) happened to coincide with with key resistance levels broken on three separate assets: Gold > $1921: previous all time highs Silver > €20: 2012 highs from ECB M. Draghi's famous "Whatever It Takes" speech BTC > $10,000:...

acrossthespread

As per previous post, the lira (USDTRY) has been getting hammered in an ongoing currency crisis through mismanaged gov & monetary policy, souring US relations, and COVID hitting the country’s tourism industry. President Erdogan, who has been directly calling the shots at CBRT (Turk cent bank), despises the prospect of raising rates, despite the need to put a floor...

acrossthespread

Explaining gold & BTC late July - early August upside price action: (Hint: it’s not “US money printing” - that’s clearly not a sudden new phenomenon to explain why NOW) Turkish Lira under attack from inflation mismanagement by President Erdogan & CBRT (Cent Bank Republic of Turkey). CBRT buys gold with dwindling FX reserves, citizens pile into crypto Turk lira...

acrossthespread Updated 

Latest CFTC COT positioning data on Gold futures actually shows hedge funds took down long positions, and upped the shorts - albeit very marginally and still net long. In the retail world, at the very top of the list of largest ETF inflows was GLD at +$3.6 billion for July, bringing the YTD net inflow total to a record $20 billion. Add in a down dollar and US...

acrossthespread

“When the stock market and unemployment are both surging simultaneously, then SPX doesn’t reflect the economy.” -talking head who thinks they’ve figured the market out Yea. No kidding. Since when was SPX ever supposed to? Most know by now that SPX doesn’t even reflect the S&P500 . SPX simply reflects in/outflows on 5 ticker symbols: MSFT , AAPL , AMZN ,...

acrossthespread

“When the stock market and unemployment are both surging simultaneously, then SPX doesn’t reflect the economy.” - talking head who thinks they’ve figured the market out Yea. No kidding. Since when was SPX ever supposed to? Most know by now that SPX doesn’t even reflect the S&P500. SPX simply reflects in/outflows on 5 ticker symbols: MSFT, AAPL, AMZN, GOOG, FB....

acrossthespread

Anyone watching (or trading) US equity markets might have noticed some (lets call it) optimistic price action in certain stocks, such as (but not limited to) AAPL, AMZN, PTON, ZM, and of course TSLA. Keen observers will also have noticed 9984 Softbank also ripping through new record highs. At the same time, these stocks tend to sell off together - and I mean...

acrossthespread

(See previous posts on extremely tight correlation between AUDJPY and SPX) Post FOMC Follow Up: Despite being the core focus of markets going in, nothing of substance out of the Fed / Powell regarding Yield Curve Control. Markets are now risk-off, with AUD leading the way down. Pre-positioning long AUDUSD on hopes of US YCC are unwinding, and dragging down...

acrossthespread

Following up from last week, AUD strength vs both JPY and USD continues to pull risk assets - namely DM equities higher, and seems like the path of least resistance is to continue rallying. AUDJPY has broken through its Dec '19 highs after surging well over +20% from March bottom. AUD is up +5% in the last 5 days since my previous post alone. Why the seemingly...

acrossthespread

AUDJPY has carried SPX (and NKY) through its post-March crash bull recovery, with the two moving near-lockstep. When people ask how/why SPX can rally amidst 40mn jobs lost- very simple: AUDJPY does not seem to care about initial jobless claims. Or virus cases, or US vs China, or US vs itself amidst riots, and any other macro data - at least not for the past...

acrossthespread

When all is said and done with monetary printing, consensus estimates for the size of the Fed’s balance sheet are upwards of $12 trillion. I’m not a mathematician, nor a monetary policy expert, but pretty sure that “unlimited” > $12tn, or whatever other arbitrary figure being thrown out there, as if: 1) things are forecastable, 2) the Fed & Treasury now acting as...

acrossthespread

Wide Aussie - JGB yield spreads in the 2000’s leading up to ‘08 crisis made Aussie dollar / JP yen the go-to levered carry trade used to fuel the US housing CDO bubble (with subsequent bubble burst → mass unwind which strengthened jpy to 70 vs USD). Post crisis era saw the AUDJPY carry trade out back on. 2016- BOJ implements YCC, pinning 10y JGB yields at ~0%,...

acrossthespread

Japan (EWJ) outperforms as Coronavirus cases are low (due to low testing), but country now on the verge of a massive virus outbreak, in line w/ EU & US. Italy (EWI) lags DM, seen as new epicenter of Coronavirus. Country on lockdown, virus priced in (relative to Japan). Italy also has sov debt & banking crisis overhang- but Japan also has massive sov debt &...

acrossthespread

Since japan reported 3rd consecutive current account deficit, ¥’s safe haven status has been put into question, and traditional correlations of risk assets (SPX, NKY) ↑ = USDJPY ↑ have broken down, with widespread implications- namely USD (& CHF, but not one of the major FX pairs) as now the sole safe haven currency if the new trend sustains. USD holders are not...