Yen Tracking Yield Spreads again?
During yesterday's sleepy markets, I highlighted in this tweet the rally in bund futures (rising prices, falling yields) may signal similar price action at the subsequent session, when US bond yields/prices return from Memorial Day Weekend. Today's bond price action did not disappoint, as the homogenous asset class moved in concert, delivering gap ups in prices and falling yields. This was a desperately needed development for yen bulls (particularly USDJPY shorts). Interpret what you wish from the chart below as to which is the dependent and independent variable (USDJPY or yield spread). Who leads whom? Shorting USDJPY has been the "pain trade" for our WhatsApp Broadcast Group, as we await Wednesday's debt ceiling vote and the JOLTs survey. Hanging in there.
Another data point pointing to gold going lower: the recent rally in spot gold price was NOT accompanied by an increase in the gold holdings of GLD. When that happens, gold rally is unsustainable, and price heads lower.
All the best,
NewMan
THANKS AGAIN, Newman.
(Have your book and bookmarked your on-line workbook, but haven't had the time yet to study them. So when it comes to the "Wisdom of Ashraf" I am still, unfortunately, flying blind.)
All the best,
Newman
Minneapolis, MN, U.S.