Capital flows drive currency markets long term — everything else is noise.
Since inauguration, Japan's been the play: 50/50 stock/bond there crushed US equivalents. JGBs cheapened 10%, Topix up 70% — net 30% return vs 12% stateside. Now JGBs trade cheap to Treasuries and the setup's only gotten better.
Bessent's jawboning $JPY but he's got structural tailwinds behind him. Short term we're fading the noise — might trade a buyback pop today — but the underlying flow and pricing still favors yen over dollar, Topix/JGBs over $SPX/Treasuries.
Capital doesn't care about headlines. It follows value and relative yield. Right now that's pointing east.
Since inauguration, Japan's been the play: 50/50 stock/bond there crushed US equivalents. JGBs cheapened 10%, Topix up 70% — net 30% return vs 12% stateside. Now JGBs trade cheap to Treasuries and the setup's only gotten better.
Bessent's jawboning $JPY but he's got structural tailwinds behind him. Short term we're fading the noise — might trade a buyback pop today — but the underlying flow and pricing still favors yen over dollar, Topix/JGBs over $SPX/Treasuries.
Capital doesn't care about headlines. It follows value and relative yield. Right now that's pointing east.
