The ruble climbed 12% since the start of April to 72.6 per dollar, its strongest level since February 2023, driven by increased oil export receipts linked to the Middle East conflict and diverging sharply from forecasts that projected depreciation, raising concerns over potential overvaluation and its impact on global risk sentiment.

Japan’s 20-year bond auction attracted a 4.01 bid-to-cover ratio, above the 12-month average, sending yields down 10 basis points to 3.68%, the lowest in three decades. Meanwhile, PIMCO holds bullish positions on 30-year notes and bearish bets on the 10-year note, anticipating a narrowing yield-curve spread deemed too steep relative to other developed markets.

Morgan Stanley’s Japan chief warns that a Bank of Japan rate hold in June could weaken the yen to around ¥170 per dollar, while a rate hike could strengthen it to roughly ¥140. This policy hinge point is expected to drive significant FX volatility, influencing exporters’ competitiveness and sector rotation within the S&P 500.

Speculative pressures have intensified the Sri Lankan rupee’s decline, prompting importers to buy more dollars and exporters to delay converting revenues, leading to capital outflows from government securities and equities. This emerging-market currency stress may dampen global risk appetite and affect inflows into US equity ETFs such as SPY.