MBCC Trading Highlights 20th December'22 - What does the BoJ yield curve announcement mean for overall risk assets? Massive surprise but inevitable!

The Bank of Japan made a HUGE announcement this morning that is causing vol to spike across the board during a quiet week as we head into Xmas. Why did the BOJ do this and what are the implications for US Bonds, Dollar and other asset classes?

It is all linked to the same trade. The moves in FX today are NOT normal as Yen has rallied 350 bps against the Dollar. The BOJ cannot go on printing Yen forever, as they can either have a strong currency or lower yields, they have thrown the baton as they admit inflation is a lot higher than imagined.

We discuss what our cross asset models are signalling today and what the trades are for Q1 in Equities, Bonds and Commodities into this move.

Also as we had said post expiration the magic magnet of 4000 gave a false sense of support, that the market fell through after as the market was allowed to move freely, which was down, as it is now at 3800!

This week we will be posting as we see a change in themes/portfolio ideas as it is a quiet week into Xmas. Our open positions are outlined below. If there is any change, we will send out an alert accordingly.

We wish our readers/subscribers and their families a very merry Xmas and Happy Holidays!