Live Markets-Yen surge, but no repeat of 2024's drama just yet
SPY•Earlier live markets posts
HALF-TIME IN EUROPE: STUCK IN THE RED CLICK HERE
COPPER SHAKES UP METALS ORDER CLICK HERE
NEGATIVE DRIVERS PILE UP CLICK HERE
EUROPE BEFORE THE BELL: BACK TO BUSINESS CLICK HERE
SUMMER'S OFFICIALLY OVER. BUCKLE UP! CLICK HERE
Why the reaction is different this time
Part of the reason is the different macro environment, one factor in 2024's yen surge was a weak payrolls print driving fears the monetary policy environment was too tight, and that the Fed would be dramatically cutting rates.
This time round, Broux says "the assertion is that growth is resilient and policy is not sufficiently restrictive. Interest rates must rise in the US but also in Japan and the eurozone to keep inflation and possible second round effects in check."
So history, as usual, isn't repeating itself, but in this case it isn't even rhyming.
(Alun John)
Yen surge, but no repeat of 2024 just yet
When the Japanese yen strengthened sharply in August 2024, it rippled across the world, sending stocks tumbling, including a 12% fall in a single day for Japan's TOPIX index, and sending the VIX fear gauge to levels not seen since Covid-19.
The theory then was that the spike in the yen forced carry trade investors who had borrowed cheaply in yen to buy other things, to reduce positions and to repay yen funding.
Now the yen is strengthening sharply, if not quite as sharply as back then, but shares are pretty content really, and the VIX .VIX hit its lowest since December late last week.
