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  • Time to buy a USD lottery ticket?

    From e-markets.nordea.com

    The tide is turning on USD excess liquidity again. For a string of technical reasons, USD liquidity actually increased on a yearly basis throughout the latter part of 2017 and into early 2018. Signs of stress related to less USD liquidity in the financial system are already visible in e.g. LIBOR-OIS spreads, which have widened to levels not seen since 2012. A wider LIBOR-OIS spread is a sign of less excess liquidity in USDs to come. The jury is still out on whether the increasing pace of the liquidity shrinkage in Feds quantitative tightening schedule, will have important bearing on also the USD and the ... (full story)

well the easiest one that is obvious is going to be USDJPY and USD CHF....Japan side already started to buy more of outside foreign bonds...so you can see it happening for a pop soon. It seems as though people are trying to hit the JPY calls before the bounce back. Absolutely zero reasons why JPY should be this strong...
1) Safe Haven? - When has the world ever been without a problem? Did it ever collapse against the USDJPY???? Never
2) Deficit - Japan has one of the most deficit per capita in the world
3) Monetary stance - Opposite direction USD up JPY flat
4) Carry trade - Obvious
5) Political issues - has its own political issues. Of course it should make this weaker...if anything should buy the CHF than the JPY for safety issues.
Quoting kingleeny
well the easiest one that is obvious is going to be USDJPY and USD CHF....Japan side already started to buy more of outside foreign bonds...so you can see it happening for a pop soon. It seems as though people are trying to hit the JPY calls before the bounce back. Absolutely zero reasons why JPY should be this strong... 1) Safe Haven? - When has the world ever been without a problem? Did it ever collapse against the USDJPY???? Never 2) Deficit - Japan has one of the most deficit per capita in the world 3) Monetary stance - Opposite direction USD...
Hint: if the Nikkei goes down and you have bonds paying below inflation what do you buy?
Yeah?! Well.. you know, that's just like.. your opinion man! - Big Lebowski
US bond yields are on the rise. Why? The main buyers don't want as many of them as they did before. That is pushing up coupons on long term US debt. An ancillary effect may be that US$ will strengthen as the wash of USD reduces.

US 10yr coupon is now ~3% IIRC, check the home page of FF where these figures are reported. That is now more than everybody in the developed western economies with the exception of Greece.

Reduction in demand for US bonds is according to a program I listen to on the BBC [ ] which reported a reducing demand from China (and others). It may be a result of anticipated rate rises, it may be an attempt by China to improve the ROI by temporarily spurning US debt until the coupon has become more enticing.
Carbon-Dioxide: the gas of life! https://youtu.be/ttJBdr6eBuo
Quoting Exodus
US bond yields are on the rise. Why? The main buyers don't want as many of them as they did before. That is pushing up coupons on long term US debt. An ancillary effect may be that US$ will strengthen as the wash of USD reduces. US 10yr coupon is now ~3% IIRC, check the home page of FF where these figures are reported. That is now more than everybody in the developed western economies with the exception of Greece. Reduction in demand for US bonds is according to a program I listen to on the BBC [ ] which reported a reducing demand from China...
The easiest way to win is just do the carry trade against JPY or CHF then you dont need to worry so much on the yield....just take take take
Quoting kingleeny
{quote} The easiest way to win is just do the carry trade against JPY or CHF then you dont need to worry so much on the yield....just take take take
I guess we could be returning to the point where a carry-trade is viable....
Carbon-Dioxide: the gas of life! https://youtu.be/ttJBdr6eBuo
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  • Posted: Mar 19, 2018 1:28am
  • Submitted by:
     Newsstand
    Category: Fundamental Analysis
    Comments: 5  /  Views: 2,898