Weston Nakamura
@acrossthespread
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Host of Across The Spread podcast. Former derivatives trader/sales @ Goldman & Jefferies, original markets content @ Real Vision & Blockworks. 🇯🇵Tokyo
Tokyo
Joined July 2019
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A decade ago, I didn’t know what a “bond yield” was
I had (have) a BARELY passing 2.51 GPA from college
I moved to Tokyo with no job, nowhere to live
Nonetheless, Goldman Sachs hired me to trade futures & options
Here’s my story👇
+trading & markets
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Warren Buffet(‘s behavior) is screaming to me of imminent 🇯🇵BOJ yield hike
Grab a tin foil hat & hear me out
Buffet is/was in Tokyo on Mon & Tues, if not earlier. Why?
According to WB- to meet CEOs of the big 5 🇯🇵trading houses he owns:
Mitsubishi Corp
Sumitomo Corp
Mitsui &Co
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Whoa this is big
BOJ policy statement just got rid of ANY explicit upper band ceiling to YCC (“1%” ← no longer)
Markets now TRULY have no idea where the goal posts are- as it seems BOJ themselves have no idea when / where / how, or IF to step in to JGB markets at all
World is
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🇯🇵BOJ JULY MEETING
1st, policy aside-
Does anyone know definitively what the term/concept “flexible control” is?
No. Obviously vague/contradictory, & (purposely) very opaque & complex, as reflected in market reactions.
Today in 8-1 vote, BOJ made a major fundamental change in
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What happened overnight in 🇯🇵 thread:
1/
10y JGB yields hit 0.245%
10:10am BOJ announces fixed rate op (offer to buy unlimited qty of JGBs)
No bids
🇯🇵BOJ FIXED RATE OP
Watch for potential cap on yields & USDJPY to follow
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Warren Buffet(‘s behavior) is screaming to me of imminent 🇯🇵BOJ yield hike
Grab a tin foil hat & hear me out
Buffet is/was in Tokyo on Mon & Tues, if not earlier. Why?
According to WB- to meet CEOs of the big 5 🇯🇵trading houses he owns:
Mitsubishi Corp
Sumitomo Corp
Mitsui &Co
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Holy smokes… 🇯🇵Q2 GDP came in with a 6-handle???
Well.. guess that’s a wrap- sell 🇯🇵NKY
But nice run, 🇯🇵👍
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🇨🇳PBOC + 🇯🇵BOJ together have added $1tn liquidity to markets since Oct
👆BOTH now undergoing major leadership change simultaneously
"I would implore anybody in America who just watches the Fed to widen your gaze and look at the BOJ"
See
@gilliantett
on
@bloombergTV
who nicely
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Just to put the scale of BOJ’s daily JGB buying/mkt fighting crisis into context:
On Thurs alone BOJ bought ¥4.6t in JGBs- single day record
¥9t what BOJ had ↑’d it’s MONTHLY scheduled JGB buying to in Dec
In other words..
BOJ bought ½ their 1-month-planned amount.. in 1 day
🇯🇵BOJ’s 2nd JGB buy op of today:
BOJ offers to buy
•3-5Y: ¥100bn
•5Y-10Y: ¥200bn
•10Y-30Y: ¥100bn
5Y JGB Auction result: 0.393%
•vs 0.121% prev on Dec 8 (pre-Dec BOJ YCC∆)
•vs 0.3% (post-Dec BOJ unlimited buy level)
•vs 0.4% ~where 10Y on-the-run JGB↑ to on Dec BOJ day
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Hey all, 2 quick updates
1. As to my whereabouts past few weeks- I got married & have been traveling (& since that has nothing to do with green & red blinking tickers, who cares- I know)
So no, I haven’t been kidnapped, but I appreciate the concern
2. BIG announcement coming (&
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"A Few Good Yen"
@lexfridman
(oops, typo again)-
Wex Fridman
&
Bank of Japan Gov Kuroda Part 3 (Pts 1 & 2 in thread👇)
1/
Meme vid in light of data revealing 🇯🇵MOF had indeed Yentervened on Oct 21, 2022.
Which for 99% of mkt commentators STILL unaware, was TOP TICK in USTs/$
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Horrible 🇯🇵JGB 20Y auction results at 12:35PM crashes JGBs at long end, taking USTs down alongside
~$200mn notional in 10Y JGB futures sold immediately- far more volume vs Aug 8th’s very strong 30Y auction, & erasing gains since
🇯🇵’s bond demand volatility ↔︎ bond volatility
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🇯🇵JPY (USDJPY) price action explained (thread)
Many questions on ¥, especially- why is ¥↑ (& so aggressively) since BOJ’s Dec’22 YCC shock?
1/
Indeed, ¥ has undergone a sharp reversal after being worst major FX vs $ in most of ‘22:
USDJPY
Start ‘22 115→ 152 high→128 curr
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🇨🇳Yuan is getting hammered, having lost all YTD gains & now printing into the 7-handle on both USDCNY & USDCNH
Very not good
Yuan melt down not only reflects recent slew of weak data out of 🇨🇳, but is highly relevant to 🌎markets
See why CNY correlates to SPX & more
👇
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🇯🇵Japan’s nightmare:
Surging JGB yields nearing YCC upper band
&
Surging USDJPY nearing Yentervention highs
Simultaneously
AND… as:
US yields↑ MORE vs JGB yields↑
&
USD↑ MORE vs JPY↓(or vsJPY↑)
..then BOJ YCC and/or MOF yentervention won’t work- as move driven by 🇺🇸side
Japan ← world’s only policy “put” left:
USDJPY closing back in on 150 level, moving lockstep w/ surging US10Y yields
The USDJPY > 150 → -2% flash crash move from this week, whether or not it was Yentervention (seems it was NOT), was driven by JPY Futures short squeeze
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🇯🇵JGB live market data
1) JGB 10s didn’t blow up (thats for tomorrow) so relax all, thx for🚩
2) I love that so many people now have their eyes on BOJ/JGB markets- really is awesome to see
Quick thread to clear things up (for now & going forward) regarding JGB mkt/price feeds
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USDJPY surging- now within< .30 of 150 handle
Why JPY matters for rates/USTs/broader mkts, especially right now:
•Post-BOJ, JPY leads UST futures ↓ (thread👇)
•No particular resist / critical level approaching on yields, just aimless momentum↑
But for USDJPY: 150 & 151
USDJPY breaks >149 & moving towards 150 handle
Current JPY intraday volatility is driven by foreigners crushing JPY, more so than domestics buying USD
This week (post-Sept BOJ), JPY trades ~flat during 🇯🇵hours, but then gets sold down right after 🇯🇵session close, when
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1/Clip of Kuroda at Davos shows disconnect of Western policy thinking vs 🇯🇵BOJ frame/approach👇
Kuroda: “I regret NOT achieving 2% CPI despite 4% CPI today”
For BOJ, YCC/easing tool NEEDED to get to SUSTAINED CPI↑ via wages↑ OVER TIME
& not something to have to “escape” from
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As much as I truly appreciate this- I’m def not “free” on YouTube (or anywhere) - I cost people’s invaluable & never-refundable time & attention. And I try to never forget that with everything I do, despite the outcome good/bad
@acrossthespread
@RealVision
You’re the best. I just rejoined
@RealVision
even though you’re free on
@YouTube
! Really great insights.
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🇯🇵Does Gov Ueda have knowledge of an imminent yentervention, thereby explaining BOJ’s strangely relaxed stance on JPY getting crushed?
Risk of a Ministry of Finance yentervention in USDJPY spot potentially over next days (as 🇯🇵 off for Golden Week), if not at some point during
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JAPAN SEEKS TO RESURRECT JUNK BOND MARKET - FT
👆also known as - Bank of Japan’s bid for unlimited JGBs is (re)approaching
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WATCH 🇯🇵 AS BOJ GETS TESTED Wed (later, few hours) 10:10am🇯🇵/9:10pm🇺🇸EST for a potential Fixed Rate Op (offer to buy unlimited JGBs & cap yields) Announce
@RealVision
1/
JGB futures are getting crushed right now on volume, implying cash JGB yields > 0.25% YCC upper bound at open
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Official YouTube channel launched!
See trailer for Across The Spread Podcast👇
This is a brand new, independent channel from scratch- so remember to:
✓subscribe
✓notifications
✓share!
& stay tuned for market content coming next week
Thank you all🙏
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🇯🇵APRIL BOJ: UNCHANGED (no hike)
USDJPY jumps through 156 handle
Extremely empty policy statement (attached) - to put in context, even when it’s a policy unchanged meeting, they still just cut and paste from the previous meeting statement (over and over again). Why they didn’t
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🇯🇵BOJ fires off its newly updated YCC sidearm weapon against JGB sellers without having to directly buy JGBs from Jan MPM
& finds success as JGB yields collapse (& thereby DM yields ↓)-for now
So WTF is this 🇯🇵BOJ “Funds-Supplying Operations against Pooled Collateral”
(thread)
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Goldman either doesn’t know what the word “recovery” means, or doesn’t know what the shape of an “L” is…
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Scrap prev tweet👇
🇯🇵BOJ JGB buying updated as of today-
Thurs: BOJ buys ¥4.6t JGBs single day record
UNTIL..
Fri (today): BOJ sets NEW single day record w/ ¥5t of JGBs bought
So, 1 month worth ↑’d JGB buying EXCEEDED in 2 straight record setting days
& ↑’d again for Mon
Just to put the scale of BOJ’s daily JGB buying/mkt fighting crisis into context:
On Thurs alone BOJ bought ¥4.6t in JGBs- single day record
¥9t what BOJ had ↑’d it’s MONTHLY scheduled JGB buying to in Dec
In other words..
BOJ bought ½ their 1-month-planned amount.. in 1 day
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Wow.. this 🇨🇳+western media impact in FX sudden swing is fairly big (extremely temporary as it may be)👇
China Told State Banks to Escalate Yuan Intervention This Week
•Onshore yuan fell toward lowest since 2007 amid weak sentiment
•PBOC used strong fixings, rate cuts to
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🇨🇳yuan↓ continues
USDCNY crosses >6.90 despite PBOC fix at 6.869 (stronger vs last close 6.871)
When initial Powell short/sweet speech dust “settles”-
WATCH for USDCNY >7 as key psych level & next shoe to drop risk assets post-Jackson Hole
Asia AM
🇯🇵-3%
🇰🇷-2.7%
🇹🇼-2.8%
🇦🇺-2%
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🇨🇳PBOC has DRAINED >1tn RMB liquidity this past week
Why?
Stimulus/support must wait for the immediate, all-hands-on-deck priority:
Stop the yuan fall
Michael Howell
@crossbordercap
joins Market Depth to discuss the 🇨🇳/Asia liquidity picture
Watch👇
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🇯🇵Kuroda drops this on final day at BOJ👇
"I think the timing for achieving the BOJ's inflation target stably and sustainably is nearing”
Kuroda said it was "quite possible" for BOJ to exit its monetary easing without upending the banking system.
😲🤔
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An interesting day of 🇯🇵top down policy activity & markets, & some longer term thoughts on BOJ ↔︎ global yields ↔︎ FX
Today
•🇯🇵AM: 10Y JGB yields hit 77bps to Sept’13 highs
•1pm: BOJ conducts an unscheduled JGB buying op targeting 5Y-10Y JGBs for ¥300bn. JGB futures
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🇯🇵BOJ↑ add’l JGB buys +¥1.4tn, targeting belly of JGB curve
+¥100b 1-3Y
+¥500b 3- 5Y
+¥500b 5-10Y
+¥300b 10-25Y
Obv any specific amt = not enough, as even “unlimited” isn’t enough
JGB 10Y >50bp YCC cap (again)
USDJPY↓ mid 127
¥futures↑ near 79
BOJ likely back in later today
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In light of this tsunami of market alerts on 🌎 DM yields flooding onto my phone at Asia close / EU opens for trading..
Just a reminder:
YES, there IS ONE last unconditional bond buyer out there: 🇯🇵BOJ
However, with JGB 10Y at .83% (new decade high), still 17bps from 1% YCC
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🇺🇸US traders- WATCH 🇯🇵JAPAN for NDX directional cues:
🇺🇸NDX’s sudden +15% upside from May~July began / moved lockstep w/ 🇯🇵NKY & TPX 3-decade highs:
W. Buffett endorsement of 🇯🇵
↓
NKY breakout >30k
↓
🇯🇵12 straight weeks of foreign inflows (from🇺🇸)
↓
🌎AI inflows pause
↓
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🇯🇵BOJ policy unchanged (neg rate remains)
+
JAPAN MOF TO CUT 20-YEAR BONDS BY 200 BILLION YEN IN JANUARY DUE TO DECLINING INVESTOR DEMAND: SOURCES
= YCC driven out of Ministry of Finance side
Gov Ueda press conference at 🇯🇵15:30
(See my prior post for preview/explainer)
🔴 JAPAN MOF TO CUT 20-YEAR BONDS BY 200 BILLION YEN IN JANUARY DUE TO DECLINING INVESTOR DEMAND: SOURCES
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And there it is- your Oct 2023 BOJ “official” policy statement.
Right on time (many hours prior to the “real” release time) as always under the Gov Ueda pre-announcing regime
BREAKING: Bank of Japan to tweak policy again to allow 10-year yields to exceed 1%
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I don’t care what asset you invest/trade, where, for what time horizon etc
If you’re not watching the potentially serious 🌎 cross-asset impacting 💣 called the Bank of Japan Jan’23 Policy Meeting next Wed (& every day up to)- then WTF are you watching??
FOMC +25bps? Really?
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Learn algebra with Kuroda-sensei!
Question:
If BOJ NOW owns 52% of JGBs outstanding…
How off-the-table unlikely would a market-nuking BOJ “QT” balance sheet unwind be?
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BOJ nominee Ueda made VERY big mistake when asked on BOJ easing as🇯🇵CPI↑ to 4.3%
Ueda: today’s CPI was THE TOP, next one will be↓
🤦♂️Even worse than calling near term data turns is a CB’er who doesn’t (know to) watch his words
Next CPI 3/23- between Kuroda/Ueda
👆Volatile day
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Debut episode of Across The Spread Podcast:
Bank of Japan Fires Back At Markets By Killing It's Own Yield Curve Control Policy
-UST yields rise explained
-BOJ “doing the tightening” for Fed
Watch (& like/subscribe)👇
(BOJ Series Pt.1)
Thank you all!
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USDJPY breaks >149 & moving towards 150 handle
Current JPY intraday volatility is driven by foreigners crushing JPY, more so than domestics buying USD
This week (post-Sept BOJ), JPY trades ~flat during 🇯🇵hours, but then gets sold down right after 🇯🇵session close, when
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🇯🇵BOJ Governor Haruhiko Kuroda on the
@lexfridman
(sorry, typo) Wex Friedman Podcast to “answer” some questions & “clarify” what BOJ just did
#secondsemesterhighschoolsenior
(Watch the intro clip as well👇)
Coming soon…
🇯🇵BOJ’s historic 2022 year in review,
& what’s coming in 2023 video
(Special thanks for inspiring my little boy bangs
@lexfridman
)
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🇯🇵BOJ POLICY (thread)
YCC Policy Unch BUT-
(re-re-reading to make sure correct, & if I am..)
PERMANENT FIXED RATE OP??
“…offer to purchase 10Y JGBs at 0.25% every business day through fixed-rate
purchase operations, unless it is highly likely that no bids will be submitted.”
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🇯🇵HEADS UP:
BOJ today conducted FIXED RATE OPERATIONS on 2Y & 5Y JGBs for 1st time
Fixed Rate Ops are offer to buy 10Y JGB in unlimited qty at a fixed rate (current 50bps vs 25bps prev→ recent “rate hike”)
BOJ never used FROs outside of 10Y
..until now. Yes, big deal
(thread)
Global debt markets extended an end-of year selloff Wednesday, prompting additional bond purchases from the Bank of Japan
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@LynAldenContact
Lyn- I’m based in Tokyo, I’m an active JPY trader / everyday resident ¥ user / 🇯🇵on the ground observer
Can’t really give a figure (% of what “people” ? All 125mn Japanese?) But I get where you’re going & you are very right to be asking- as there’s a huge shift in consciousness
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🇯🇵BOJ Dec Policy Meeting
(ongoing thread)
“Slight” & “surprise” tweak to YCC on 10Y JGB yield band from ±0.25% → ±0.5%
AND
“Increase” in quantity of JGB buying
i.e. “tighten” + “easing” net out
This is NOT about 🇯🇵CPI ↑
this is about MARKET stability
Kuroda live in 5min
🇯🇵JGB “market” is SHARPLY deteriorating (thread)
1/ BOJ released most recent Bond Market Survey (quarterly survey of actual JGB market participants: ~80 banks/dealers, insurance cos, asset mgrs)
Last survey before of Kuroda out
Market “functioning” ↓ at worst levels since YCC
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🇯🇵BOJ Ueda: FX volatility was a factor in YCC tweak
Chief Cab Sec Matsuno: Won’t rule out options to stem FX vol
PM Kishida: Will remain vigilant to FX moves
& now..
FinMin Suzuki: CLOSELY WATCHING LONG-TERM INTEREST RATE
“Not my f’n job” ←a very foreign concept in 🇯🇵policy
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Seriously- WTF is going on w/ 🇯🇵BOJ & media “leaks”
post-Fed & ECB: press test
#3
“…will discuss tweaking YCC Friday to let long-term interest rates rise beyond its cap of 0.5% by a certain degree, Nikkei has learned”
USDJPY & EURJPY -1.2%
See👇
Clip of rant on 🇯🇵Japan’s state-backed market meddling
BOJ’s Ueda use of fin media/press as BOJ communications arm
MOF’s Suzuki/Kanda & yenterventions, real & jawboned
At least 🇨🇳doesn’t pretend to be capitalist
Keep it up & watch foreign inflows→OUT
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This is not JPY buying, this is USD selling - and likely knee-jerk position exiting/unwinding at that.
In other words - JPY downside is far from being off the hook
#FOMC
$yen $DXY
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🇯🇵BOJ Day Videos on
@RealVision
YouTube thread
But first- see this intro clip on Kuroda & JGB buying vs JPY burning w/
@RaoulGMI
James Aitken
@AitkenAdvisors
+ a markets crack addict 👇
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🇨🇳PBOC major leadership overhaul:
•Party Secretary Guo Shuqing→ OUT
•Gov Yi Gang→ OUT (despite Mar’23 reappoint)
•Pan Gongsheng (Dep Gov)→ seen to take both 👆roles + head of SAFE (oversee 🇨🇳FX reserves)
WHY & WHY NOW?
🇨🇳yuan in crisis
Watch👇
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What happened overnight in 🇯🇵 (Wed 3/30)
1/
Comprehensive review of the week coming on
@RealVision
but for now - here’s a medium different from my last 2 days of intraday reporting on BOJ/JGB & cross asset markets 👇
@RaoulGMI
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Politics & economics aside- RIP
@AbeShinzo
-san
Abenomics was my catalyst to move from 🇺🇸 → 🇯🇵 to try & break into the world of institutional finance
Hugely & eternally transformational figure- nationally, globally & personally
Much respect✊🫡
#安倍晋三
#AbeShinzo
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USDJPY briefly breaks > 145 (where 🇯🇵1st intervened in Sept ‘22)
But 145 on spot USDJPY isn’t so much a “resistance level” (USDJPY printed 145.07 before reversal) - what matters more for price action are JPY futures which already broke < .007 on 🇺🇸data
🇯🇵MOF Suzuki earlier at
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🇯🇵 Officials Jawboning ¥ “intervention”
Fri 6/10:
Min of Fin, Fin Services Auth & BOJ held an “emergency meeting” & released a rare 3-way joint statement regarding FX market as USDJPY hit 134.50
(rough translate by me👇)
My take- 🇯🇵¥ intervention still FAR away (thread)
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Heading into a critical 🇯🇵BOJ meeting tomorrow in which the world’s last negative policy rate anchor may finally be removed after 8yrs..
Watch my Part 3 discussion w/ Grant Williams-san
@ttmygh
👇
Bank of Japan: “A World Where There Is An Interest Rate”
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🇨🇳PBOC daily yuan fix rate stronger vs estimates this week
Mon: +600pips
Tues: +670pips
Wed: +790pips
Thurs: +900pips
👆no avail
& so- to end the week, PBOC goes +1,000 pips above estimates today for strongest (vs estimates) on record, in addition to yesterday after-hours
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🇯🇵BOJ Governor Kuroda showed up at
@RealVision
MeetUps Tokyo earlier
@RaoulGMI
how’s that for access?
(
@EmmaCFA1
yes, it was actually him)
#RVmeetups
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I’m excited & honored to announce that I’ve joined
@Blockworks_
Macro to launch a brand new podcast show: Market Depth
A unique perspective & insight from Asia on global markets across asset classes (equities, fixed income, FX, commods, crypto), recorded
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🇨🇳 HEADS UP: USDCNY breaks > 7.0
If this maintains- look out below, risk assets
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Japan ← world’s only policy “put” left:
USDJPY closing back in on 150 level, moving lockstep w/ surging US10Y yields
The USDJPY > 150 → -2% flash crash move from this week, whether or not it was Yentervention (seems it was NOT), was driven by JPY Futures short squeeze
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Happy 2023 from Tokyo! 🗼🎌
‘22- what an unforgettable year
I want to extend my sincere gratitude to ANYONE & EVERYONE who gave me a platform to share my views, a discussion, a thought, a laugh, or even just a moment of your time. Means the world to me
‘23 will be wild- ready?
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Just want to take a moment to sincerely say THANK YOU to my fans/followers, each and every 1 of you
Whether you happen to agree/disagree with any view of mine, I’m grateful for you giving me the time of day & hear what I have to say (& put up with my antics)
You drive my purpose
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Alright BOJ Gov Kuroda - no messing around. This is extremely serious- trillions can move w/ half a sentence.
So just play it straight, as per 👇
#日銀 #日銀金融政策決定会合 ＃日銀黒田 #円安
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🇯🇵BOJ Dec’22 YCC “shock” explained (thread)
1/
10YJGB range ±0.25%→ ±0.5% was indeed for MARKET/FINANCIAL (in)STABILITY & (dys)FUNCTION reasons
& NOT some sudden 🇯🇵>3% CPI BOJ panic (& 2days before in-line🇯🇵CPI)
OR JUST realized🌎CB’s YTD hiking
OR ¥↓ (~½ ‘22 losses erased)
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If anyone wants relative context on the legitimacy of a Fitch sovereign credit rating/action
🇺🇸 ←DOWNGRADE to AA+ on debt & politics (no particular catalyst)
Same day..
🇯🇵←MAINTAIN ‘A'/Stable: “Japan’s low borrowing costs support its sovereign rating” (post ↑ rates)
🤡’s
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🇯🇵Bank of Japan Takes A Major Gamble With Yield Curve Control
Jul’23 BOJ policy meeting is FAR more than a “YCC tweak” - its a major structural overhaul of HOW it defends JGB yields against market forces
This is the Ueda high wire act- huge risk
Watch👇
🇯🇵BOJ JULY MEETING
1st, policy aside-
Does anyone know definitively what the term/concept “flexible control” is?
No. Obviously vague/contradictory, & (purposely) very opaque & complex, as reflected in market reactions.
Today in 8-1 vote, BOJ made a major fundamental change in
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Wow- 🇪🇺ECB shots fired → 🇯🇵BOJ
The ECB’s message marks “a very rare case of a central bank expressing concern toward BOJ’s policy normalization.”
My take- ECB is relying on BOJ to maintain being 🌎’s duration anchor in order to carry out its own hawkish policies
The ECB is warning about the bond market risk of a Bank of Japan policy change
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Central banks this week:
🇺🇸FOMC→ Hawkish Pause
🇨🇳PBOC→ Catch-Up Cut(s)
🇪🇺ECB→ Hawkish Hike
🇯🇵BOJ→ Dovish Autopilot
& winner of “(Relative) Clearest Policy Communicator Award” for June goes to:
🇪🇺Lagarde🏆
Others:
🇺🇸“bro- you ok?”
🇨🇳”bro- you alive?”
🇯🇵”bro- you awake?”
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*** RTRS CORRECTION - BoJ Changes Upper Bound For 10-Year JGB Yield Target To 1.0% Point ***
👆people/media (other than “state-media” Nikkei) do not know what they’re talking about
This is what comes of prioritizing speed vs thoroughness. Know which sources are reliable / not
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🇯🇵Bank of Japan leadership change cast of characters explained via Breaking Bad (thread)
With 🇯🇵upper & lower house parliament hearings of nominees Ueda (governor) & Uchida + Himino (2 deputy govs) done,
& Gov Kuroda’s final BOJ meeting of his tenure on Fri
My personal take👇
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Just made vid
@RealVision
#BTC
price action explain from Oct/Nov’21 ATHs blow off top & plunge → now, from (overlooked) lens of listed derivs & futures backed ETFs’ heavy hand in mkts - $BITO
No sooner, ProShares announces $BITI INVERSE BTC ETF, debut today 🇺🇸mkt open
(thread)
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🇯🇵Bank of Japan announces emergency bond buying op.; second in day - RTRS
2nd time today
🇯🇵HEADS UP:
BOJ today conducted FIXED RATE OPERATIONS on 2Y & 5Y JGBs for 1st time
Fixed Rate Ops are offer to buy 10Y JGB in unlimited qty at a fixed rate (current 50bps vs 25bps prev→ recent “rate hike”)
BOJ never used FROs outside of 10Y
..until now. Yes, big deal
(thread)
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And it continues…
Day 3 of 🇯🇵BOJ JGB Fixed Rate Ops Festival:
2Y @ 4bps
5Y @ 24bps
10Y @ 50bps
offering to buy in unlimited size
Bloomberg: BOJ Announces Unscheduled Bond Purchases for Third Straight Day
🇯🇵Bank of Japan announces emergency bond buying op.; second in day - RTRS
2nd time today
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Long after 2hr food/drinks expiry, we, the last remaining soldiers, end w/ a message for
@RaoulGMI
Thank you to
@RealVision
Tokyo - this far exceeded my best expectations (even including the surprise visit from “BOJ Gov Kuroda”)
I wish the other
#RVmeetups
as much fun as we had
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Ha this is a great question-
I’ve had this Twitter handle & name since 2019 & have since been interviewed many times- this is the 1st time anyone’s ever asked me about this (someone once said “great name”)
For those not in the trading community- to “cross the spread” means to
@acrossthespread
Please explain "Across the Spread" ... I think I understand, but would be interested to hear what it means to you and why you chose it.
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BOJ YCC change & JPY ↓ is ironic in concept, yes for sure. But not really a surprise in practice
BOJ’s widening of YCC bands saw JGB yields ↑, but also saw (if not caused/contributed to) foreign/US yields also ↑ (i.e. 🇯🇵 = worlds duration anchor)
& since JGB yields upside is
@acrossthespread
@jroche071973
The irony is that the BoJ widened the band and stopped easing as much and USDJPY is going to the moon regardless.
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Heads on on JPY
I just posted the “longer” version of this
There is a massive outstanding (currently) out of the money JPY call options position open on CME at 0.0069 & .006925 for $1.6bn notional (single trader) expiring Fri 12/8. I’ve been following
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Just fyi- it is not (just) “Fed Week”
Other than FOMC, I’m watching:
🇯🇵BOJ
🇬🇧BOE
🇨🇳PBOC
🇹🇷CBRT
🇨🇭SNB
🇧🇷BCB
+ more
…& by “watching” I mean- watching markets/(re)actions, not press releases & podiums
(need to +🇭🇰HKMA)
See CB cal in⏱️local & 🇺🇸EST
Note ECB Lagarde speaks Tues👇
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🇯🇵BOJ Ueda first press conf now
WATCH JPY FUTURES dropping fast & approaching 74 level
IF it breaks ↓ thru that prev March BOJ gap up 74 level, USDJPY → towards 140 quickly
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Ok so these voices (which I seriously appreciate) are growing louder
So, to the Market Depth faithful-
here’s just a hint/peek at what I’ve been up to in “the background”
No, not done yet, but close. So that’s all I can announce for now
👇
Stay tuned
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Heads up:
USDJPY has (finally) cracked above the key 125.86 level, and now triggering further momentum upon 🇯🇵 cash close
126.86 was the BOJ Kuroda highs from 2015, when QQE pt1 took USDJPY from mid-70s~80s → 100 in ‘13, then QQEpt2 →125.86
Will add more to this thread later
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🇨🇳PBOC’s MOST aggressive yuan defense in ‘23 (by FAR)
USDCNY fix >600pips vs estimates (Nov’22 levels)
+🇨🇳State banks sell $
+lift x-border financing
+huge $CNH 7.2 calls in→OTM on expiry
👆Why all this & NOW?
🇨🇳USD bond market imploding💣
Watch👇
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“USDJPY to 130”
Mkt at 129.20
Now THAT’s called: sticking neck out & taking huge rep risk to make a bold, fringe call w/ fist pounding conviction. This is the stuff that 🇯🇵2nd-tier bank chief strats are made of!
(You f’n kidding me..?? Just an FYI to you guys: 🤡exist = alpha)
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Many sell offs YTD driven by yield surge, even by ↑CPI prints, or hawkish Fed.
Y’day indiscriminate 🌎 x-asset bloodbath was clearly not same. Yes, Fri CPI = catalyst but what actual mkt driver was diff this time?
BOJ let YCC slip & JGBs💣
This is exactly what/why I flagged👇
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Do yourself a favor- take a min to watch this clip from my recent quick trip to
@RealVision
NYC…
A simple but critical reminder from my high school self to ALL market participants - traders, investors, analysts, economists, policy makers etc
Expect the unexpected
👇
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HAPPY 🇯🇵FY NEW YEAR🎉
April: THE MOST CRITICAL MONTH for BOJ
4/8 Kuroda OUT→Ueda IN
4/21 🇯🇵CPI
4/28 Gov Ueda 1st BOJ meeting
Already historic month for 🌎macro
I will be ALL OVER BOJ on Market Depth
Starting w/ 🇯🇵foreign bond flows + My BOJ view👇
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BOJ KURODA: BOJ'S LARGE BOND PURCHASE MAY BE DAMAGING MARKET FUNCTIONS, BUT WE MUST MAINTAIN SIGNIFICANT MONETARY EASING.
K… thanks for sharing
Actually though what this (continues to) mean- if BOJ “destroying JGB mkt in order to support JGB mkt,” then zero fucks given about ¥
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What happened in 🇯🇵:
JPY intraday commentary (thread)
(During Asia hours / pre Europe)
1/
After testing through AM session, USDJPY breaks into 118 handle a 1:30JST. Can expect EU to pick up momentum later
Currently longest losing streak on record for ¥ (13days)
@RealVision
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🇯🇵Mkt close ahead of Kuroda Press Conf
JGB Futures halted at PM open on BOJ YCC ❌change announce, huge rally on ¥434bn notional at opening print
Those who shorted within the last 5 days (& there were many) are getting killed/force cover
👇Futures:
UST 2s, 10s, 30s
¥ vs Gold
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🇺🇸 equity investors- are you aware of 🇯🇵NISA?
If not, you need to be.
Nippon Individual Savings Account, now revamped today allowing 🇯🇵residents to invest tax-exempt up to ¥3.6mn/yr, ¥18mn total, for life
Potentially massive untapped source of capital flow into equities
🇯🇵
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Coming soon…
🇯🇵BOJ’s historic 2022 year in review,
& what’s coming in 2023 video
(Special thanks for inspiring my little boy bangs
@lexfridman
)
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🇯🇵unilateral intervention into major FX last week was a huge potential game-change turning point
Not in terms of ¥ price action or this ¥tervene act itself (big as it was)- but breaking convention & opening door for others to do same
🇬🇧next? Then who?
🇯🇵WTF have you done/started
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FYI these BOJ “unscheduled” &/or “emergency” JGB buying ops since Fri YCC change
1. They’re SUPPOSED to be “unscheduled” (“YCC + flexibility”) - only BOJ knows what happens/doesn’t, how & when
2. Until right up against new 1% cap, not an emergency either
This is the new policy
BoJ Announces Unscheduled Bond Buying, Second Time This Week
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For those saying late Oct was/n’t top in US yields…
I’m not going to say whether or not it was- may very well be/not
I’m just wondering if they realize & are factoring in what actually triggered the reversal (mkt/flow-wise) when making these UST calls..?
Hint- 🇯🇵JPY
(thread)
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