The Bank of Japan Announces that They Will Adjust Their Yield Curve Controll Policy
What to Buy
The Japanese recently ended its long-term downtrend. This news coming from the BOJ is going to give the yen further strength. If the yen is going up then you want to buy the yen through these two ticker symbols: $Japanese Yen Trust (FXY.US)$ and $Proshares Ultra Yen (YCL.US)$. If you don't believe in this yen strength then short the yen through this ticker symbol: $ProShares UltraShort Yen (YCS.US)$
The Trends are Changing
The bear market rally appears to be over. And the Bank Of Japan is changing their monetary policy which may hurt equities even further. Check out this short YouTube video to see the change in the trends through the ticker symbols that follow the macro economic environment. I also briefly talk about the BOJ's policy change at the end of the video. Click the link below to watch the video.
The Japanese 10-Year Treasury Yields have been pegged at 25 basis points. Any time the 10-Year yield in Japan approached 25 bps level then the Bank Of Japan implemented their unlimited bond buying regime to buy the 10-Year treasuries, essentially bringing the yield down keeping it below the 25 basis point peg. This is a form of market manipulation to keep bond yields down and stimulate inflation within the economy. One result of this massive buying scheme was that the yen's value would weaken greatly as the BOJ printed more of its own currency to purchase the 10-Year Treasuries. This factor, along with the fact that the Federal Reserve has been sending yields skyrocketing, has helped the US dollar's massive rally. And when the US dollar is on a very strong rally with treasury yields then it has had a negative effect on US equities in the current macroeconomic environment.
Recently the head of the BOJ announced that they will adjust this yield curve policy that has weakened the Yen and strengthened the dollar. We still need to hear more from the Bank Of Japan but the current head of the BOJ is about to resign so this is a perfect pivot point for Japanese monetary policy.
Just look at the reaction in the markets.
The Japanese Yen absolutely skyrocketed off of this news. This sent the dollar down which strengthened most other currencies on the forex markets.
Yields in the US skyrocketed just like treasury yields around the world. In the current macro environment high yields are bad for equities. That is the current narrative in the markets at the moment. You can see the major futures indices tanking off of this news while the VIX is skyrocketing. So far this does not look good for equities at all.
Dollar Strength is Over?
Some investors would think that the falling dollar should provide strength to the US equity markets. But if the dollar is falling simply because other currencies are gaining strength then we cannot only rely on the Dollar Index to gauge the health of the equity markets. The domination of the US Dollar in forex markets might be over at least for now. The Bank of Japan is signaling that they will allow yields to rise in their country which will affect yields worldwide. It seems like treasury yields will be the new litmus test to watch in order to gauge the health of equity markets. So if yields keep rising then it will be negative for equities.
This Does Not Look Good For Equities So Far
It looks like the initial reaction is going to follow the change in trends. The bear market rally in equities appeared to be over. And the market reaction to this news from the BOJ seems to confirm the end of the Santa Rally. We need to see the dollar falling with yields for equities to remain bullish. Remember that the market will do whatever it wants so you still want to remain vigilant. In the past when the economy was not in this high inflationary and high yield environment then rising yields were good for treasuries. That has not been the case during the bear market this year. Possibly next year rising yields will be good for equities once again. But this does not look good for equities so far.
$Invesco QQQ Trust (QQQ.US)$ $SPDR S&P 500 ETF (SPY.US)$ $iShares Russell 2000 ETF (IWM.US)$ $VIX Index Futures(DEC4) (VXmain.US)$ $SPDR Dow Jones Industrial Average Trust (DIA.US)$ $Gold Futures(FEB5) (GCmain.US)$ $Powershares Exchange Traded Fd Tst Db Us Dollar Index Bullish Fund Etf (UUP.US)$ $SPDR Gold ETF (GLD.US)$ $iShares Silver Trust (SLV.US)$ $Ishares Iboxx $ High Yield Corporate Bond Etf (HYG.US)$ $Ishares Iboxx $ Investment Grade Corporate Bond Etf (LQD.US)$ $iShares 20+ Year Treasury Bond ETF (TLT.US)$ $Crude Oil Futures(JAN5) (CLmain.US)$
$TENCENT (00700.HK)$ $SSE Composite Index (000001.SH)$ $CSI 300 Index (000300.SH)$ $CSI 300 Index (000300.SH)$ $FTSE Singapore Straits Time Index (.STI.SG)$ $NIO-SW (09866.HK)$ $NIO Inc. USD OV (NIO.SG)$ $NIO Inc (NIO.US)$ $BILIBILI-W (09626.HK)$ $Bilibili (BILI.US)$ $Baidu (BIDU.US)$ $BIDU-SW (09888.HK)$ $XPeng (XPEV.US)$ $Li Auto (LI.US)$ $BYD COMPANY (01211.HK)$ $BYD Company Limited (002594.SZ)$ $S&P/ASX 200 (.XJO.AU)$ $FTSE Singapore Straits Time Index (.STI.SG)$
$TENCENT (00700.HK)$ $SSE Composite Index (000001.SH)$ $CSI 300 Index (000300.SH)$ $CSI 300 Index (000300.SH)$ $FTSE Singapore Straits Time Index (.STI.SG)$ $NIO-SW (09866.HK)$ $NIO Inc. USD OV (NIO.SG)$ $NIO Inc (NIO.US)$ $BILIBILI-W (09626.HK)$ $Bilibili (BILI.US)$ $Baidu (BIDU.US)$ $BIDU-SW (09888.HK)$ $XPeng (XPEV.US)$ $Li Auto (LI.US)$ $BYD COMPANY (01211.HK)$ $BYD Company Limited (002594.SZ)$ $S&P/ASX 200 (.XJO.AU)$ $FTSE Singapore Straits Time Index (.STI.SG)$
$Apple (AAPL.US)$ $Tesla (TSLA.US)$ $Microsoft (MSFT.US)$ $Amazon (AMZN.US)$ $NVIDIA (NVDA.US)$ $Meta Platforms (META.US)$ $Alphabet-C (GOOG.US)$
$Chevron (CVX.US)$ $Phillips 66 (PSX.US)$ $Valero Energy (VLO.US)$ $Devon Energy (DVN.US)$ $Occidental Petroleum (OXY.US)$ $W&T Offshore (WTI.US)$ $United States Oil Fund LP (USO.US)$ $United Sts Brent Oil Fd Lp Unit (BNO.US)$ $Imperial Petroleum (IMPP.US)$ $Houston American Energy (HUSA.US)$ $Indonesia Energy (INDO.US)$ $BP PLC (BP.US)$ $Exxon Mobil (XOM.US)$
$Mullen Automotive (MULN.US)$ $Arcimoto (FUV.US)$ $Nikola (NKLA.US)$ $Fisker (FSR.US)$ $Rivian Automotive (RIVN.US)$ $Lordstown Motors (RIDE.US)$ $Full Truck Alliance (YMM.US)$ $Ford Motor (F.US)$ $General Motors (GM.US)$
$Chevron (CVX.US)$ $Phillips 66 (PSX.US)$ $Valero Energy (VLO.US)$ $Devon Energy (DVN.US)$ $Occidental Petroleum (OXY.US)$ $W&T Offshore (WTI.US)$ $United States Oil Fund LP (USO.US)$ $United Sts Brent Oil Fd Lp Unit (BNO.US)$ $Imperial Petroleum (IMPP.US)$ $Houston American Energy (HUSA.US)$ $Indonesia Energy (INDO.US)$ $BP PLC (BP.US)$ $Exxon Mobil (XOM.US)$
$Mullen Automotive (MULN.US)$ $Arcimoto (FUV.US)$ $Nikola (NKLA.US)$ $Fisker (FSR.US)$ $Rivian Automotive (RIVN.US)$ $Lordstown Motors (RIDE.US)$ $Full Truck Alliance (YMM.US)$ $Ford Motor (F.US)$ $General Motors (GM.US)$
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iamiam : BOJ pivot, the beginning of the end... Japan will fail first,
SpyderCall OP iamiam : I had a feeling this would happen this year. Everybody is saying this is going to kill equities. A long slow death.
SpyderCall OP iamiam : Some think this will be good for US equities but im still on the fence about that.
bullrider_21 : This is more like a midterms cum year end rally. Because a Santa Claus Rally occurs between the last 5 trading days of the year and first 2 trading days of next year.
Also 1% is 100 basis points. I believe you know this. It's just a mistake.
SpyderCall OP bullrider_21 : you are right. thanks for the correction. slipped my mind.
SpyderCall OP bullrider_21 : I hope we climb further into years end. I didn't know there were statistics like that for a year end santa rally. We could very well rally into year end. But who knows what will happen next year. Most people are calling for next year to be very bad. just like they said about 2022. Im still unsure about next year at this point
bullrider_21 SpyderCall OP : There a Stock Trader's Almanac. You can check it out. There are some analysts who think the Fed will start cutting rates in 2H2023 and then there will be a rally. We just have to wait and see.
SpyderCall OP bullrider_21 : That is basically what I am hearing. 1st half next year will be bad according to analysts
SpyderCall OP bullrider_21 : I will check out this "stock traders almanac." im going to look it up now. thanks![[undefined]](https://static.moomoo.com/nnq/emoji/static/image/default/default-black.png?imageMogr2/thumbnail/36x36 "undefined")
SpyderCall OP bullrider_21 : The vix looks lile it wants to go down. Today may be green. I hope this is the beginning of that end of year Santa price spike
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