FX: 🇨🇳🇯🇵🇺🇸 Cross Asset Tie-Ins (thread)
Meltdowns in #SPX #NASDAQ $LUNA $UST #BTC & some commods (metals)
&
Buying in 🇺🇸Treasuries (“USTs” from here forward, not ref to Luna $UST) & JPY, as 🇺🇸CPI again↑
👆Each of above have their own story- but just to show charts on CNY JPY👇
1/
First just note April 20th (marked as red line on charts below). This date/event was the last time 🇯🇵JGBs were (perceived by some to be) “freely” traded- as in, no pre announce by BOJ to cap yields
Post 4/20 BOJ cap yields “forever”
& this is when things changed cross asset👇
2/
By removing day to day “will/won’t they” uncertainty BOJ (knowingly/not) shifted relentless & historic 🇯🇵¥ selling → 🇨🇳yuan selling
& yuan selling since 4/20 has been alarmingly sudden & sharp, w/ global cross asset market impact
3/Stocks
See 3 charts👇 #NASDAQ futures vs USDCNH (inverse, so “USDCNH ↓” = yuan ↓)
NDX sell off started long before any CNY stability disrupt, so NDX / risk asset selling happens for various reasons simultaneous & interchangeable
Since 4/20 its been yuan led, near tick-tick
4/ Crypto
Luna UST story is wild & incredibly significant in itself. & yes idiosyncratic flows occurring.
But a -$40bn vanish doesn’t happen in vacuum, I don’t care what asset it is, it has impact/being impacted
Just to point again to 🇨🇳yuan
BTCUSD & CNHJPY👇(only 1 bottoming)
5/ 🇺🇸Treasuries
10Y UST yields & USDJPY (UST & yen futures) have been directionally lockstep, & still are intraday (chart 3: 🇺🇸CPI release👇)
But since 4/20, USTs ~bottomed while ¥ hadn’t (yet), & USTs & ¥ began diverge
As per my “straddle” trade:
UST calls & JPY puts
6/ Treasuries cont
Lot of talk of 🇯🇵 FX hedging costs ↑ is preventing 🇯🇵 from buying USTs
As I’ve been saying- yes prob for some, but def not all (🇯🇵 investor ≠ monolith). 🇯🇵 buying USTs unhedged happens (hence straddle trade)
YTD: if long 10y UST from 🇯🇵 ❌hedge, PnL = flat
7/ Commods (metals)
Gold, silver, copper (& others) sold off from same starting point: 4/20👇
Cooper especially has been getting slammed as yuan getting killed
Just closed out long puts on HG copper futures as approaching $4 level ← “short yuan” play
8/
Crypto comm, stock investors, bond traders, commod specs/producers- each have own very real & legitimate thing happening. Not trying to diminish anyone’s very real issues
But when emotionally invested everything seems to revolve around your thing
Just don’t miss big pic too👇
How timely (& frankly not useful sorry to say)
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