Macro Report/Insights: Japan, Bonds, FX and Real Rates

Signals for the trade

Hey everyone,

As I have mentioned multiple times, I believe we are near an inflection point in risk assets. I am going to lay out how I view these inflections across all the major asset classes, the specific signals I am watching, and how I am thinking about managing trades.

I want to touch on one point before we delve into the specific details though: Trading is betting on an unknown. You extract returns from the market because you are taking risks in a situation where you are uncertain of the outcome. This is where the idea of “buy the rumor, sell the news” comes from. When there is certainty around a specific event or view in the market, there is unlikely to be any premium left to extract. This is why fading specific news events can be valuable.

Why does this matter for what I am talking about? Because we are betting on things that have yet to take place, things that are unseen. When I understand this as my starting point, then I begin to think about how I evaluate risk/reward differently.

Topics for Today:

• Japan and the Nikkei

• Signals For Bonds

• FX Insights

• Tech, AI, and The Preconditions Surrounding Real Rates