Print baby, print! what rising u. s. yields mean for the japanese – powershares db usd bull etf (nysearca_uup) _ seeking alpha

Some readers brand him a doomsayer, but if you’ve read him, you know that he has a real, genuine sense of humor (as opposed to a deeply ingrained cynicism masquerading as such) and is really engaged in a kind of good natured quest for what one might call “alternative” story arcs that don’t necessarily fit neatly into the prevailing market narrative.

I contrasted that characterization with what I call “perpetual pessimists” whose only real goal is to disparage others and turn readers into bitter skeptics.

Alternative story arcs are important when it comes to markets.


Yoga shelter rochester schedule They can be conceptualized as the output of Monte Carlo simulations which depict unrealized outcomes. Prenatal yoga video first trimester That is, they effectively make and remake history. Yoga asanas for concentration and memory If we can appreciate unrealized outcomes just as much as realized ones, then we can begin to think in terms of how things could be different and what that would mean in the context of our investments. Yoga abs workout youtube That would have been helpful in the lead-up to the August 2015 Chinese yuan devaluation, which, had you entertained the possibility that Beijing had just about all it was willing to take when it came to subdued economic growth, was a pretty easy alternative narrative to construct.

The first thing to note here is that Japan has pledged to anchor 10-year yields at around 0%. Yoga akademi mersin But to truly comprehend what that means, you have to delve deeper. Yoga sequence ideas for teachers Here’s Edwards (emphasis mine):

In September, the BoJ shocked markets by dropping its explicit target of increasing base money, the amount of money it prints, by an annual 80 trillion yen ($788 billion). Yoga sri lanka galle Under its new framework, the BOJ will buy long-term government bonds as necessary to keep 10-year bond yields at levels of around zero percent. Yoga centers in indianapolis Many commentators saw this as monetary tightening, especially as 10-year JGB yields were trading well below 0% at the time. Baptiste yoga wiki Upon reflection, many commentators thought this was an incorrect interpretation of events as the BoJ had effectively written the government a blank check for further expansion, with the promise that yields would remain around zero.

See, the problem is that if US yields continue to rise, dragging EUR and UK yields along for the ride, then Japan will be forced to do more to anchor 10-year yields. Yoga pranayama techniques Here’s Edwards again (emphasis mine):

Amid the surge in US and European bond yields, my attention is drawn to the dog that isn’t barking. Ashtanga yoga poses for weight loss The Bank of Japan revamped its monetary policy in September and although many saw it as a monetary tightening and admission of failure, others such as myself saw it as potentially the most significant monetary easing since the Fed’s QE1 back in 2009. Yoga mudra asana As it seems likely that U.S. Yoga diet chart for weight loss 10-year yields will continue to drift up to 3%, the BoJ will have to work very hard to anchor 10-year yields around zero. Haute yoga san diego The printing press will go into overdrive and the yen may plunge, both against the dollar and against the euro. Yoga symbols text We have been here before (2015) and, at that time, yen weakness dragged down the whole Asian currency complex and ultimately forced the Chinese to devalue that summer. Yoga london bridge There is a possibility we may revisit that paradigm soon.

The chart below shows major upward moves in US and UK bond yields. Yoga instructor salary But the interesting bit for me is in the circle near the bottom right-hand side of the page. Yoga center of chico Eurozone 10-year yields are being propped up by the U.S. Yoga relaxation script bond rout, but Japanese 10-year yields are stuck at around zero.

How do we know? Because, in September, the Bank of Japan promised they would target zero, in the same way the US targeted bond yields after the war at 2½%. Prema yoga flow In economics 101 we learn that no-one can control both price and quantity, meaning that the BoJ may have to print a lot more money to meet its 0% target. Sumits yoga chandler classes So if U.S. Yoga sequences yields continue to drift upwards and revisit the upper bound of the 30-year downtrend of yields (we believe to be above 3¼%), 10-year bond spreads will turn against the yen. Isha yoga music mp3 download free The corollary of this analysis is that the dollar’s surge will become supercharged, and the ensuing downward pressure on emerging market currencies and commodity prices we saw this time last year will shortly reappear with more political friction likely than before.

What Edwards is saying, in short, is that in order for the Japanese to offset the upward pressure on yields exerted by moves in the 10-year Treasury (NYSEARCA: TLT), they’ll need to print like drunken sailors, which will necessarily depress the yen (NYSEARCA: FXY) in an environment where the currency is already predisposed to falling against a surging dollar (NYSEARCA: UUP).

This, in turn, could depress other Asian currencies, imperiling China’s exports, as the yuan is still pseudo-pegged to the surging USD. Y2 yoga charlotte schedule That could lead to further CNY devaluations and, thus, further instability.

This, like the dollar shortage narrative, is something the incoming President needs to be apprised of, but probably isn’t. Vinyasa yoga flow sequence for beginners The whole fiscal stimulus thing will serve to exacerbate everything outlined above, as the quicker the Fed hikes, the more pressure they’ll be on that Japanese 10-year yield and the more yen they’ll have to print to keep it anchored.

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