Macro, FX and Rates Strategist

Ishaan Dev Kapoor

Macroeconomics

<ul>
<li>Three Treasury interventions in three weeks, EUR/JPY sales, FIMA request, doubled buybacks, read as term premium suppression. The Treasury put looks to have a higher strike than the Fed put.</li>
<li>Rising term premium squeezes the Treasury twice: it inflates the interest bill, and it threatens equities, the one asset class keeping US financial conditions loose. Debt management becomes financial stability.</li>
<li>Japan's bill buffer is spent. The next yen defence sells coupons into the long end or borrows through FIMA. By 16 September the cap has moved or it hasn't.</li>
</ul>


Three Treasury interventions in three weeks, EUR/JPY sales, FIMA request, doubled buybacks, read as term premium suppression. The Treasury put looks to have a higher strike than the Fed put.
Rising term premium squeezes the Treasury twice: it inflates the interest bill, and it threatens equities, the one asset class keeping US financial conditions loose. Debt management becomes financial stability.
Japan's bill buffer is spent. The next yen defence sells coupons into the long end or borrows through FIMA. By 16 September the cap has moved or it hasn't.


The Treasury Put, Financial Stability and the Road to Fiscal Dominance

Equity Derivatives Broker - Delta One Japan, Vantage Capital Markets Japan

François-Xavier Pustoc'h

Equity Derivatives Broker - Delta One Japan

Independent Financial Broker

Vantage Capital Markets Japan

We provide world class financial solutions to our extensive institutional client base including rapidly growing corporations, leading investment banks, commercial banks, asset managers, private equity funds, family offices and hedge funds.

Our services include capital market offerings and placements, wholesale brokerage and execution of cash and derivative products (both listed and OTC) across a range of asset classes.

VCM has offices in London, Hong Kong, Tokyo and Dubai from where we service our global client base. Our strength lies in the experience and quality of our teams, supported by excellent operations and infrastructure.

<ul><li>Japanese Equities were up 3.88% last week (vs. M. World +0.81%) driven by Insurance, Banks and Wholesale Trade sectors.</li><li>JPY interest rates and Credit remained stable (ITRAXX Japan 50.81).</li><li>JPY was under pressure this week. USDJPY 149.62 (+1.37), EURJPY 163.62 (+2.22).</li></ul>

Japanese Equities were up 3.88% last week (vs. M. World +0.81%) driven by Insurance, Banks and Wholesale Trade sectors.JPY interest rates and Credit remained stable (ITRAXX Japan 50.81).JPY was under pressure this week. USDJPY 149.62 (+1.37), EURJPY 163.62 (+2.22).

Head of Research and Global Chief Strategist, Steno Research

Andreas Steno

Head of Research and Global Chief Strategist

Macro and Geopolitical Research House

Steno Research

Steno Research is a new macro and geopolitical research house. We are based out of Copenhagen, Denmark, but have an international team and a strong network of sources and partners around the world. The team is lead by Andreas Steno, previous global head of strategy at Nordea Bank, and Mikkel Rosenvold, former chief consultant in the Danish Ministry of Finance.

Cross Asset Strategy

<ul><li>Welcome back to our weekly positioning update.</li><li>It’s hard not to touch upon the recent moves in equities once again, with markets trying to digest whether it was the beginning of a broader outflow from large cap / tech into small cap stocks and indices like Russell 2000, or if it was simply a hiccup due to extended positioning and a profound fear that the cutting cycle was already fully priced in, leaving tiny room for extensive gains in large cap stocks, which were up &gt;20% YTD before the CPI report.</li><li>We provide 3 reasons as to why it was not a rotation below.</li></ul>

Welcome back to our weekly positioning update.It’s hard not to touch upon the recent moves in equities once again, with markets trying to digest whether it was the beginning of a broader outflow from large cap / tech into small cap stocks and indices like Russell 2000, or if it was simply a hiccup due to extended positioning and a profound fear that the cutting cycle was already fully priced in, leaving tiny room for extensive gains in large cap stocks, which were up &gt;20% YTD before the CPI report.We provide 3 reasons as to why it was not a rotation below.

Positioning Watch – There was no “rotation” from large to small caps

<ul><li>Recently, numerous JPY pairs have breached the levels where the BoJ / MoF intervened in April/May, prompting markets to wonder if (and when) authorities might step in again to support the Yen.</li><li>The reaction in USDJPY post key events/meetings has been consistently uniform for the past 12-18 months.</li><li>Markets build up a hawkish narrative prior to the event, only to unwind positions when the news turns out to be less hawkish than anticipated.</li></ul>

Recently, numerous JPY pairs have breached the levels where the BoJ / MoF intervened in April/May, prompting markets to wonder if (and when) authorities might step in again to support the Yen.The reaction in USDJPY post key events/meetings has been consistently uniform for the past 12-18 months.Markets build up a hawkish narrative prior to the event, only to unwind positions when the news turns out to be less hawkish than anticipated.

Japan Watch – Why BoJ Will NOT Intervene Anytime Soon

Global Multi-Asset Investment Strategist, True Insights

Jeroen Blokland

Global Multi-Asset Investment Strategist

Build Well-Diversified Multi-Asset Portfolios

True Insights

Our research helps investors build well-diversified multi-asset portfolios and profit from market developments. In addition, our unique and proven Macro – Sentiment – Valuation (MSV) investment framework ensures a consistent flow of new investment opportunities. Together with our market views, these opportunities will be reflected in our live ETF-based Global Multi-Asset Portfolios.

<ul>
<li>Our Fear &amp; Frenzy Sentiment Index hit Frenzy for the first time during this rally.</li>
<li>We marginally lower the weight of Developed Market Equities since we are already underweight risky assets, which, unlike 2022, has not paid off this year.</li>
<li>In addition, we close our inflation-linked bond and Yen trade.</li>
</ul>


Our Fear &amp; Frenzy Sentiment Index hit Frenzy for the first time during this rally.
We marginally lower the weight of Developed Market Equities since we are already underweight risky assets, which, unlike 2022, has not paid off this year.
In addition, we close our inflation-linked bond and Yen trade.


Changes in Portfolio Weights: Sentiment Hits ‘Frenzy,’ We Comply

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The Treasury Put, Financial Stability and the Road to Fiscal Dominance

The US Treasury keeps feeding the fiscal dominance trade. We read three interventions in three weeks as term premium suppression, trace the...

Ishaan Dev Kapoor

Weekly Macroeconomic Report

Japanese Equities were up 3.88% last week (vs. M. World +0.81%) driven by Insurance, Banks and Wholesale Trade sectors. JPY interest rates and...

Vantage Capital Markets Japan

Positioning Watch – There was no “rotation” from large to small caps

Welcome back to our weekly positioning update. It’s hard not to touch upon the recent moves in equities once again, with markets trying to digest...

Steno Research

Japan Watch – Why BoJ Will NOT Intervene Anytime Soon

Recently, numerous JPY pairs have breached the levels where the BoJ / MoF intervened in April/May, prompting markets to wonder if (and when)...

Steno Research

Changes in Portfolio Weights: Sentiment Hits ‘Frenzy,’ We Comply

Our Fear & Frenzy Sentiment Index hit Frenzy for the first time during this rally, telling us to lower the weight of equities.

Jeroen Blokland

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