Are Rates Saying Something Different?
Continuing from the full tile boogie yield curve inversion witnessed on Friday March 22nd, in Something Eventually Has To Give?
Are fluctuations in FX pair carry trades, through forward swaps or borrowing in JPY to fund USD, a side effect, causation or result?
In any event, both of those rates demonstrate a JPY/USD vs LIBOR relationship. Did somebody need a lot of short duration collateral in short order around year end and as of 03/15?
Above note the JPY/USD vs SP500 congruence since Feb 2018, a 12 month correlation? Stronger JPY/USD concomitant with SP500 decline; weaker JPY/USD with SP500 rising. Conversely, stronger USD/JPY, SP500 rising; weaker USD/JPY SP500 declining.
Of late, larger equity sell offs have been concomitant with significant percentage moves in JPY/USD; USD/CNY and JPY/CNY, in most cases with strengthening for the base (1st) currency in the pair.
Is the fluctuation in pricing of those FX pairs reflective of somebody needing "dollars", how they may be sourcing them, and ALSO concomitantly with rates "saying" something different?
Are fluctuations in FX pair carry trades, through forward swaps or borrowing in JPY to fund USD, a side effect, causation or result?
As opposed to rising equities.... "RATES are saying something different." - Salmo Trutta - Mar 2, 2019 - Something Eventually Has To Give?Remembering our catechisms...
Interest rates are never to be misconstrued as the price of money. Interest rates are the cost of loan funds. The price of money is reflected in FX pairs and indices.Below note the rise in USD 3 month Libor and negative JPY borrowing cost until December 22nd, followed by a steady decline until 2/26 in JPY and 3/12 in USD. Remember, when its NIRP the investor is paying to park the money, not the other way round.
In any event, both of those rates demonstrate a JPY/USD vs LIBOR relationship. Did somebody need a lot of short duration collateral in short order around year end and as of 03/15?
Above note the JPY/USD vs SP500 congruence since Feb 2018, a 12 month correlation? Stronger JPY/USD concomitant with SP500 decline; weaker JPY/USD with SP500 rising. Conversely, stronger USD/JPY, SP500 rising; weaker USD/JPY SP500 declining.
Of late, larger equity sell offs have been concomitant with significant percentage moves in JPY/USD; USD/CNY and JPY/CNY, in most cases with strengthening for the base (1st) currency in the pair.
Is the fluctuation in pricing of those FX pairs reflective of somebody needing "dollars", how they may be sourcing them, and ALSO concomitantly with rates "saying" something different?
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