@Brad_Setser @TheStalwart @Birdyword What I mean is that the Yen line on your chart (green) SHOULD be rising when yield differentials are falling (blue and gold). I realize the historical correlation is different.
English
Eric Hickman
1K posts
Eric Hickman
@EricWHickman
25-year US Treasury Manager & Strategist | 79% accuracy on calls for the last 3 years | Founder, Lantern Capital
Denver, CO Se unió Eylül 2010
185 Siguiendo812 Seguidores
@EricWHickman @TheStalwart @Birdyword but rate differentials have been shrinking not rising, at least in nominal terms. yen has decoupled a bit from the standard nominal rate differential plot (not a new thing, but still notable)
English
I know Japan has its own idiosyncrasies. But what's the tweet-length explanation of why various Asian currencies (particularly KRW) have been so weak, despite the extraordinary export boom. I assume @Brad_Setser and @Birdyword know.
Joe Weisenthal@TheStalwart
*YEN SLIDES TO WEAKEST LEVEL VERSUS DOLLAR SINCE 1986
English
@albatrosary @robin_j_brooks Well but your country has the lowest debt service to GDP ratio of the G-7. There is nothing fiscally wrong that I can see.
English
Here's the thing about the Yen. Markets are obviously expecting another round of intervention, which is what's preventing the Yen from falling more steeply. So just imagine where the Yen would be without this. $/JPY would be 170 or maybe even higher...
robinjbrooks.substack.com/p/fiscal-distr…
English
@Brad_Setser @TheStalwart @Birdyword Rate differentials falling imply a weaker Yen. US rates higher than Japanese rates.
English
@TheStalwart @Birdyword Puzzle is that nominal rate differentials at the 2, 5 and 10y horizons have shrunk a lot -- so there is an argument that the yen is weaker than implied by at least some of the rate fundamentals
(it also tends to sell off on oil risk)
English
@Convertbond The US has a debt service to GDP ratio of 3.2% now. Other countries have proven that's not a limit. The US is not going to avoid rate hikes in a fiscal dominance way. Far, far from it.
English
People talk about rate hikes as if we are back in the 90s, few even look at the real of the math - thank you Lukas.
Lukas Ekwueme@ekwufinance
The US cant afford higher rates - In the next 12 months, around $8T of Treasuries need to be rolled. - The average coupon on that stack is about 3.3%. - The 1‑year Treasury is roughly 4%. Rolling that $8T at today’s 1‑year level would add around $49B in annual interest costs, and that’s before you factor in the interest burden on an ongoing $2T annual deficit. Volcker could crush inflation with double‑digit rates because inflation had already driven debt‑to‑GDP down from about 100% to around 30%. First you inflate the debt away, then you raise rates to kill inflation.
English
@TheStalwart Did you know that Japan has the lowest debt service to GDP ratio of the G-7, below Germany? Anyways, Japan is doing really well. Higher rates and a weaker currency make sense.
English
In USD terms, the Nikkei is up 33% this year (38% in yen)
English
There are things we can cite to argue there is too much speculation in stocks, but brokerage account margin debt is not one of them. Divide the $1.4 trillion in margin by the S&P 500's total value to get 2.18%. The historic median since FINRA started reporting in 1997 is 2.3%.
English
@Brad_Setser @TheStalwart @Birdyword One thing I can assure you of; there is no fiscal/sovereign fear in Japan. We would see CDS react if there was.
English
@vtg2 But he's not defying President Trump. Trump can't have inflation either.
English
New Federal Reserve Chair Kevin Warsh got a big boost for his job security from the Supreme Court at a crucial moment, with investors increasingly betting that he’ll defy President Donald Trump and raise interest rates this year.
politico.com/news/2026/06/2…
English
@SquawkStreet @elerianm The Fed won't raise, but they need to jawbone intensely. They are 5+ cuts too loose.
English
"I think the market is too hawkish - I would be shocked if we get a rate hike in July and I would be surprised if we get a rate hike this year," says Allianz’s @elerianm
cnbc.com/video/2026/06/…
English
@Markzandi No I know. It is just that the aggregate numbers look good. The economy is overstimulated in my opinion.
English
Economic data is very STRONG right now; the whole reason why inflation is a problem. It has gotten better month after month all year in a very clear way; LDEI, surprise index, coincident index. Reaching for negative things to keep your narrative alive is the worst kind of economics. It confuses the public that trust you.
English
The raft of economic data released last week isn’t sending off red flares, but it is sending off yellow ones. No red flares because real #GDP is still growing at a 2% pace, with AI and corporate tax cuts powering business investment. But yellow flares because consumers struggle to maintain their spending. Adding to the concern is the fall in real disposable income — the fodder for future spending — which rarely happens outside recessions. And the saving rate is seldom lower. With consumers accounting for over two-thirds of GDP, and business investment less than one-seventh, those yellow flares are getting brighter.
English
Most people talk about Stock prices when they talk about Seasonality, but Volatility and Credit Spreads also follow seasonal patterns...
Off-Topic #ChartStorm on Seasonality: chartstorm.info/p/off-topic-ch…
English
@cha12771 Sorry, I should've said why. I think my cycle within a cycle theory is what's going on and eventually rates will rise enough to slow the economy again, and rates will fall the new lows. lanterncapital.com/the-6-deficit-…
English
The Fed needs to raise rates and/or convince everyone they will urgently.
English
@Callum_Thomas The cycle comes back every 5-ish years in some form, recession or soft landing. The 2-year is a more symmetrical way to see the cycle.
English
@rev_cap Inflation is a big problem right now. I don't understand Barkin and Williams downplaying it.
English
The early signs of inflation easing: I made it up
Every Fed speaker every month since 2021
First Squawk@FirstSquawk
FED'S BARKIN: INFLATION REMAINS TOO HIGH, THOUGH THERE ARE EARLY SIGNS THAT PRICE PRESSURES COULD EASE.
English
@SantiagoAuFund The dollar is just interest rate differentials for the last 5 years, anything more complicated than this is unnecessary.
English
Today we are releasing a report called The Band.
At 80 pages, it is our most complete statement on how the Dollar system actually functions, and why so many forecasters continually get its future wrong.
It can be found at the link below.
research.santiagocapital.com
English
@robin_j_brooks No, I’m not. The Yen narrative is borne of ideology, not facts.
English
@robin_j_brooks Japan has the lowest debt service to GDP of the G-7. 5yr CDS for Japan is lower than the US @ 28bps. The Yen is falling because interest rate differentials are falling between US and Japan. The Yen should be falling. The Japan story right now is reacceleration.
English
The Yen has just fallen below its 2024 low versus the Dollar. Now imagine where $/JPY would be if there weren't the constant threat of intervention. That threat is the only reason $/JPY isn't 170 or higher. Japan's massive debt is a disaster for the Yen...
robinjbrooks.substack.com/p/what-should-…
English