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Abenomics On Hold As USDJPY Slides Back Under 100
While "risk-on, risk-off" has been an oft-repeated mantra in this period of extreme monetary policy machinations, it would appear the most relevant factor in the last six months is in fact "Abenomics-on" as a concerted plan to devalue the JPY has provided ammunition for carry traders to rampage through every dismal risk asset in the world. After collapsing through the Maginot Line of 100 on May 9th, JPY has rallied back and spent the last two weeks fighting over 101. It appears, given today's shift back under 100 that, for now, Abe is going to need a bigger boat. It seems, as with the Fed's balance sheets, that it's not about the 'stock' of USDJPY (level) but the 'flow' (depreciation rate) if risk assets are to continue their march ever higher in the face of a not-so-bullish reality. As one would expect, NKY futures and US (and European) equities are fading fast along with this 'driver'.
Intraday we tested down to near 100 earlier, bounced, and now fading fast...
Nikkei futures are fading fast.
Charts: Bloomberg
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Wheeee...... :)
Need. MOAR. Dynamite
Lots of institutional buys lurking below 100.00. Dynamite planted...
Japan Abenomics:
1. Flood market with JPY to weaken JPY and target 2% inflation
2.Oops, Bond holders think that 0.5% yield is not attractive with 2% inflation. Bonds sell off and yilds rise rapidly, putting pressure on Japan's ability to pay interest on the existing debt.
3.Use the preinted JPY to buy Bonds, thus Bonds rally, yields come down and JPY strengthens back below 100.
Wow, what a surprise this all is. Yawn.........................
Sundance: "use enough dynamite there Butch ?"
Nice. The yutes here will have to dig up that one on u-toob...
Call it the Abe hump. Shoots up and then deflates. This guy has a nice comment on it.
http://confoundedinterest.wordpress.com/2013/06/02/bleeding-economic-indicators-commodities-cds-and-industrial-production/
It blows my mind that their bond market is rallying, and these days it's tough to get me interested.
Meanwhile, the ISM Manufacturing Index here in the states dropped below 50 in May.
http://mam.econoday.com/byshoweventfull.asp?fid=456249&cust=mam&year=2013&lid=0&prev=/byweek.asp#top
A print of 49.0, down from 50.7 in April and 51.3 the month before, on expectations of a rise to 51.0.
Wheeee...indeed!
Yeah...something doesn't seem right here. It really does feel..."mis managed" as it were. It's like a dance almost..."we'll do it quantitatively"...but there is no "outcome" or "end game"...just....EEEEEasing.
and look at it. It's beautiful, Yields dropping. Stocks rising. It actually just stopped raining out by me.
QE4eva. Rejoice.
I'd go so far as to say it's magically delicious.
I guess that's why the /Es is celebrating with a nearly 10 point bounce in the last 10 minutes? WTF.......?
Correlation of the USDJPY is pretty strong. Now that we're into June, is gold permitted to settle above 1,414? Inquiring minds want to know if the Fed is still stuck between bond yield escalation and a short squeeze on the Morgue.
The (caugh,caugh) usd is catching a cold. All those usd longs in the "roach motel", just got sprayed with RAID ®.
I simply can not understand.. how the world is watching Weimar all over again.. and celebrating? REALLY?? global central planners are re creating weimar / zimbabwe ... and everything is excited about that??
Weimar was only one currency. This is a multi-currency race to the bottom. What I can't understand is how they continue to hold the lid on PMs. If rising yields are a threat (seems they are), then they are trapped between (a) needing to print moar to keep buying up the unrepayable instruments of public debt and (b) threatening to taper (they can't as we know) in order to prevent the re-emergence of real money to put to death their beloved fiat.
No wonder Ben wants to cast off to Pomo Island.
"What I can't understand is how they continue to hold the lid on PMs." - what's the premium for taking delivery of physical, that's how. It will work for a bit longer, but the divergence between the paper and physical is reflected in the premiums being paid. This really throws a wrench in the works for industryies that actually use silver, copper, lithium, etc., basically any PM or rare earth. Again, another negative aspect of business that will impact supply lines. Only one thing is clear, when supply lines break and goods and services stop crossing borders, troops will. Pretty clear that the West wants Syria to be the flash point and excuse to lay waste to Iran. Won't happen, but the desparation by the bilderbergs is palpable.
I got long usd/jpy. I figure the R/R is there. Stop just under 99.50 for a profit 100.50 . 2:1 what the hell, I'm feeling lucky.
aud/usd just took out .9710. I love it!
How do you evaluate the risk, pray tell? It's an entirely manipulated trade, n'est-ce-pas?
I just told you. I went long with a stop just under 99.50 with a TP target of 100.50 2:1 risk reward.
Your 2:1 r/r is based on an assumption about the distribution of the potential movement of the USDJPY. Where do you get confidence about the underlying risk distribution? Historicals? Options/implieds? Those become unreliable when manipulation is the marginal driver. That's what I was getting at...
All trading these days is based on assumption.
Joking aside. From a technical standpoint, the BoJ will print themselves into oblivion before they let the ¥ devalue.(JGB yields)
I'm more worried being on the long side of the ¥ trade. When the wheels come off that currency it's going to be armagheddon.
we getting close to your stop loss!
If you you're really lucky the Fib line could fail and you'll have air down to 98.5. Not much chance of it but these are unusual times.
There it goes, Boom.
so whats the new resistance? He got stopped out!
Caveat: Never trade on my recommendations unless you confirm them yourself.
I see trend line support from the lows in Nov'12 and last April come in at about 98.5. Long term lines like that rarely fail and if I can see them others will have buy orders waiting there. I doubt that line will fail on the first assault but these are unusual times.
Nobody wants that paper. Boom motherfuckers. What paper is next? How are those treasuries looking Ben?
Looks like Turkish bonds were next to be thrown into the fiery furnace....
I went ahead and held my usd/jpy long @ 99.70. It's a small, so I want to see where this bad boy ends up.
Since Abenomics is closely related to Krugmanomics is closely related to Keynsianomics Gone Mad I must state:
You are all wrong.
Krugman is never wrong. Just ask him. Abe knows what he's doing. Just ask him.
Like Linus in the Pumpkin Patch, just you wait and see. The Great Krguman will arise from the Pumpkin Patch and save Halloween. And Japan.