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Jul 09 - 02:36 PM
USD/JPY - Two For Twos May Mark Top For USD/JPY's Yield-Led Rise
First appeared on eFXplus on Jul 09 - 12:45 PM
  • USD/JPY's yield-led rebound may top with 2-year Tsy yields sub 2%
  • Two-year yields at 1.88% are well below the 2.5% Fed funds target
  • Huge FF-2-year yield inversion is classic recession, Fed ease warning
  • Fed funds are already pricing in 75bp of cuts by April 2020
  • So 2-year yields pricing in at least 50bp looks very plausible
  • Suggests 2-year yields bounce and USD/JPY rise will fade before 2%
  • Powell's take awaited over next two days at Congress
  • ISMs sliding since Q3 '18 also a caution for oldest ever expansion

Chart: Click here

Source:
Refinitiv IFR Research/Market Commentary

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