Giant Hedge Fund Goes "Soros" On Bank Of Japan: Bets Billions That Japan, And MMT, Will Break
Less than a week ago, we wrote that "As Yen Crash Accelerates, It Puts Catastrophic End Of MMT Experiment In The Spotlight" a less than cheerful assessment about the endgame in Japan echoed on Monday morning by Bloomberg, which wrote that "Japan Starting to Crack as Yen Tumbles With Stocks and Bonds" in which it wrote that despite the yen crashing to a 24-year low (for the same reasons we have repeated again and again, namely you can't keep your 10Y yield at 0.25% and avoid a currency collapse in a scorching inflationary environment), Tokyo stocks were down the most since March (the plunged again on Tuesday).
Meanwhile, also on Monday, Deutsche Bank's head of FX George Saravelos came the closest of any establishment banker to warn what we have been saying for years - the great MMT experiment is ending, and its unwind will begin in Japan, that "Guniea Pig" for all major central bank experiments (first ZIRP, first QE, first ZIRP, first central bank buying of ETFs, etc).
In a piece titled, "The printer is on overdrive", Saravelos wrote that if the current pace of buying persists, "the bank will have bought approximately 10 trillion yen in June. To put that number in context, it is roughly equivalent to the Fed doing more than $300bn of QE per month when adjusting for GDP!"
Saravelos also echoed what we said in our preview of the end of MMT, writing that he worries that "the currency and Japanese financial markets are in the process of losing any sort of fundamental-based valuation anchor" adding that "the more global inflation picks up, the more the BoJ prints. But the more easing accelerates, the higher the need to press hard on the brake when the (inflation) cliff approaches and the more dangerous it becomes. As a result, we will soon enter a phase where dramatic and unpredictable non-linearities in Japanese financial markets would kick in." The DB strategist concluded by asking "if it becomes obvious to the market that the clearing level of JGB yields is above the BoJ's 25 basis point target, what is the incentive to hold bonds any more?"
Of course, without skin in the game all these perceptive observations are just that, and meanwhile - well - only money talks... and when it comes to Japan, so many have been steamrolled when their money talked and shorted Japanese bonds, only to be crushed by the world's most famous "widowmaker" trade.
But this time is different: at least that's the view of BlueBay Asset Management - one of the world's biggest hedge funds - as it gears up to become this generation's George Soros caught in a crushing battle with the Bank of England Bank of Japan.
As the BOJ escalates attempts to keep a lid on bond yields, BlueBay is betting that our thesis laid out in March is right, and that the central bank will be forced to abandon a policy that’s increasingly out of sync with global peers. Echoing what we said just a few days ago, Mark Dowding, BlueBay’s London-based chief investment officer, said that the BOJ’s so-called yield curve control is “untenable."
"We have a sizable short on JGBs," Dowding, whose firm oversees about $127 billion across hedge funds and other fixed income products, said in an interview with Bloomberg on Monday. BlueBay started shorting Japan’s sovereign debt when the yen slid close to the 130 per dollar level several weeks ago, not too long after we wrote that "Yen At Risk Of "Explosive" Downward Spiral With Kuroda Trapped."
£££ Bear market รอบนี้มาจาก J Powell behind the curve แต่เหมือนหวยจะไปออกที่ญี่ปุ่นปะฮะ
Less than a week ago, we wrote that "As Yen Crash Accelerates, It Puts Catastrophic End Of MMT Experiment In The Spotlight" a less than cheerful assessment about the endgame in Japan echoed on Monday morning by Bloomberg, which wrote that "Japan Starting to Crack as Yen Tumbles With Stocks and Bonds" in which it wrote that despite the yen crashing to a 24-year low (for the same reasons we have repeated again and again, namely you can't keep your 10Y yield at 0.25% and avoid a currency collapse in a scorching inflationary environment), Tokyo stocks were down the most since March (the plunged again on Tuesday).
Meanwhile, also on Monday, Deutsche Bank's head of FX George Saravelos came the closest of any establishment banker to warn what we have been saying for years - the great MMT experiment is ending, and its unwind will begin in Japan, that "Guniea Pig" for all major central bank experiments (first ZIRP, first QE, first ZIRP, first central bank buying of ETFs, etc).
In a piece titled, "The printer is on overdrive", Saravelos wrote that if the current pace of buying persists, "the bank will have bought approximately 10 trillion yen in June. To put that number in context, it is roughly equivalent to the Fed doing more than $300bn of QE per month when adjusting for GDP!"
Saravelos also echoed what we said in our preview of the end of MMT, writing that he worries that "the currency and Japanese financial markets are in the process of losing any sort of fundamental-based valuation anchor" adding that "the more global inflation picks up, the more the BoJ prints. But the more easing accelerates, the higher the need to press hard on the brake when the (inflation) cliff approaches and the more dangerous it becomes. As a result, we will soon enter a phase where dramatic and unpredictable non-linearities in Japanese financial markets would kick in." The DB strategist concluded by asking "if it becomes obvious to the market that the clearing level of JGB yields is above the BoJ's 25 basis point target, what is the incentive to hold bonds any more?"
Of course, without skin in the game all these perceptive observations are just that, and meanwhile - well - only money talks... and when it comes to Japan, so many have been steamrolled when their money talked and shorted Japanese bonds, only to be crushed by the world's most famous "widowmaker" trade.
But this time is different: at least that's the view of BlueBay Asset Management - one of the world's biggest hedge funds - as it gears up to become this generation's George Soros caught in a crushing battle with the Bank of England Bank of Japan.
As the BOJ escalates attempts to keep a lid on bond yields, BlueBay is betting that our thesis laid out in March is right, and that the central bank will be forced to abandon a policy that’s increasingly out of sync with global peers. Echoing what we said just a few days ago, Mark Dowding, BlueBay’s London-based chief investment officer, said that the BOJ’s so-called yield curve control is “untenable."
"We have a sizable short on JGBs," Dowding, whose firm oversees about $127 billion across hedge funds and other fixed income products, said in an interview with Bloomberg on Monday. BlueBay started shorting Japan’s sovereign debt when the yen slid close to the 130 per dollar level several weeks ago, not too long after we wrote that "Yen At Risk Of "Explosive" Downward Spiral With Kuroda Trapped."