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Where Now For The Yen Carry Trade ?

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I haven't checked the dates but I am assuming

1. The fed reserve will meet in sept and oct.

2. The fed will NOT raise rates in Oct because of its proximity to the US Congressional Elections (though they may raise next month)

3. The fed will continue its cycle of IR rate rises AFTER the elections as it sees fit.

This being the case, the differential (providing Japan continues to move away from ZIRP) between Japan and US should continue to narrow slightly leading to a further unwinding of the Yen Carry Trade. Little has been mentioned of this in the mainstream press recently and whilst other Central Banks are tightening providing an outlet for this cheap money from Japan, the dollar is going to come under further pressure.

This should also translate into weakness in Emerging stock markets.

People seem to think that a US IR rise pause will prevent monetary tightening. I'm arguing that unless Japan also pauses the Credit Crunch is on.

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I haven't checked the dates but I am assuming

1. The fed reserve will meet in sept and oct.

2. The fed will NOT raise rates in Oct because of its proximity to the US Congressional Elections (though they may raise next month)

3. The fed will continue its cycle of IR rate rises AFTER the elections as it sees fit.

This being the case, the differential (providing Japan continues to move away from ZIRP) between Japan and US should continue to narrow slightly leading to a further unwinding of the Yen Carry Trade. Little has been mentioned of this in the mainstream press recently and whilst other Central Banks are tightening providing an outlet for this cheap money from Japan, the dollar is going to come under further pressure.

This should also translate into weakness in Emerging stock markets.

People seem to think that a US IR rise pause will prevent monetary tightening. I'm arguing that unless Japan also pauses the Credit Crunch is on.

IR diffs are not the only matter. The Yen could deavalue through greater supply and a naturally lower real rate of return in thier Economy.

In many ways Japan has been running a Gordan Brown/Nu Labour economy for a lot longer than us. It's used 10 massive programs of staggering government spending, deficit spending, issuing debt which is now multiples of all economic activity, with a similar crony army of corporations and officals who are gorging on these, with the population dependant on the millions of non-jobs created. Its trade surpluses are shrinking.

America may have used tax cuts to spur spending and stop saving, an unfair distribution of capital to the very rich, deficit spending, and a trade imbalance, but it is not a place where returns - i.e. freedom - in the economy are going to be swamped by legions of crony bureocrats and millions of non-jobs.

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  • 301 Brexit, House prices and Summer 2020

    1. 1. Including the effects Brexit, where do you think average UK house prices will be relative to now in June 2020?


      • down 5% +
      • down 2.5%
      • Even
      • up 2.5%
      • up 5%



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