Uk market, horrid, but then Thursday’s local elections (while less important, more a barometer) could provide the kerosene to smouldering discontent. Saw the most negative party political broadcast from Labour I’ve ever seen, literally “don’t vote for Farage”
US market, driving high speed towards a cliff in the dark, hoping people think the high (but inflation fuelling) rate is worth any risks, without releasing tech has been eating their lunch for months.
And now the canary in the coal mine, most indebted (yeah yeah Japanese exceptionalism), productive powerhouse and all that, but holy skyrocket Batman, those rates are heading to the moon. Then for our friends the yen USD spread carry traders, this figure is hitting a new low, time for Japan to dump some USD treasuries.
What this space, hold onto your hard, but for the love of God, hold hard assets. #coffeechain fueling the mental gymnastics this morning.
quotingJapan feels like a ticking time bomb, 10y yield on a stairway to heaven, highest for 25y, desperately trying to find a true rate more similar to those around the world. BoJ continually makes intervening to keep rates low, but by doing this they are pushing the problem further into the future.
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Then as currency value slides, risks of import price increases create massive inflationary risks.
Bond rates continue to rise, while 30y debt may be locked in, these increases will gradually notch up government interest expenditure, until that eventually pops and bankrupts the government, bonds start getting sold, even if it is the sensible options and all bests could be off.
As Robin Brooks says, “Japan in crisis”
https://open.substack.com/pub/robinjbrooks/p/japan-in-crisis?r=gnhl2&utm_medium=ios
