Hence, the real challenge now isn’t technical. It’s cultural. Diffusing GenAI across teams in non-tech firms is ironically an cultural and leadership issue, not an IT one. Companies that treat it as such will unlock the real value imo.

AI adoption by US businesses jumped from 6% to 42% in 18 months. A big leap came as major models improved early this year. But growth has recently plateaued, likely not from lack of interest, but from the realities of integration.

That said, the ability to pass on inflation increases in general is a function of labor markets, and Japan's labor market is actually reasonably tight. Clearly, the potential stimulus given the Upper House elections could also reinforce that narrative. Decisions, decisions.

Even more so as rice prices have started moderating and hence the further impetus from rice prices should start to fade.

Inflation has clearly picked up across standard measures, but most of the increase is driven by rice prices. If you take out all foods and energy (ie a different way of viewing "core" inflation), the inflationary pressures actually look pretty manageable.

BoJ in an interesting spot currently. OIS markets are pricing some hesitant hikes. Few additional thoughts below.

Was great to join @JoumannaTV of @Bloomberg this morning to talk about global yields, term premia and some of the global fiscal initiatives that we are seeing. If I look a bit tired it's because I was - the chat took place in the very early hours of Zurich this morning 😉

Japanese life insurers were heavy buyers of ultra-long JGBs ahead of new solvency rules (starting April 2025), which require market-consistent valuation and stress testing. That regulatory-driven demand has now largely plateaued. A key anchor at the long end is gone, for now.

Global term premia are rising. And Japan’s curve is showing it most clearly. Many drivers for this in Japan: 1) BoJ QT, 2) fiscal concerns, 3) political uncertainty. And an underappreciated driver: a change in Japanese insurance regulations (see next tweet to explain)

Rates Trend Following continues to bleed - entire 11 years of performance wiped out now

If this is the underlying reason for CHF strength, it may well be here to stay. Which also makes it much harder for SNB to effectively manage it, since SNB is already at zero rates and a more FX-centric monetary policy, even if needed, might simply agitate the US more.

Indeed, CHF’s volatility premium over other G10 currencies is at its highest since 2017. Markets are paying up for protection via CHF options.

BofA argues that CHF is now behaving more like gold: a liquid, neutral hedge against long-term fiscal uncertainty in a world that doesn't have many G10 alternatives, not short-term market stress. (bit of chart crime, granted, but the underlying point is an interesting one)

CHF typically rallies in "risk-off" environments which is why it's considere a "safe haven". But that isn't the case currently and yet, the currency keeps strengthening.

The Swiss Franc (CHF) keeps strengthening - even as the SNB has returned to ZIRP and volatility has declined. This goes against the conventional wisdom and argues something else is going on. A few points below.

Some of their songs defined my youth. Amazing how music can trigger memories. Anyway. now I regret not getting tickets 😉😭.

Claims data came in quite strong. I use NSA data bc the seasonal adjustments are a bit murky and distort the underlying picture. Claims haven't increased as much as seasonality would typically suggest, at least not for the data reported today.

A few more charts and observations here. First, payrolls momentum is ticking up a little again. Meanwhile, NFP diffusion hasn't broken down further, ie while govt employees did a lot of heavy lifting in this report, other industries are net-net not off worse vs last month.

Stellar headline NFP number, but notable that a significant portion came from government employees while service-providing jobs have lost momentum

There is no shortcut. But once the momentum is there, it compounds for your team, your reputation, and hopefully for your career.