Prepare for a flash crash: conditions for winners in a monetary policy transition

Long-term US bonds have continued to fall, and long-term interest rates have continued to rise. Shares are also being sold. Sales were triggered by the large number of JOLTS job openings of 9.61 million, but when viewed from the number of unemployed people, it was 1.51 times higher, which is lower than 1.53 in the previous month. Also, since it has definitely fallen from the maximum of 2 times, it cannot be said that it is a real factor.

The market is fearful of further interest rate hikes and the maintenance of a high interest rate policy over a long period of time due to a strong economy and continued high inflation (crude oil rent and wages). I feel uneasy about the deterioration in bond supply and demand due to changes in macro policies where corporate capital investment is not borrowed, but rather government subsidies.

Additionally, the recent rise in long-term interest rates (fall in long-term bonds) is influenced by the fact that the bonus calculation period for traders and hedge funds is approaching the end of October (factual end of the period). I have no choice but to adjust my position before the end of the term. This Friday in particular is a unique day for flash crashes where major market fluctuations are likely to occur. This is because the day before the 3 consecutive holidays between Japan and the US and China's consecutive holidays overlap, and liquidity decreases all at once.

Due to downgrades, government closures, and supply and demand unease, US bond futures versus spot sales positions are expanding (BIS survey: 564.9 billion dollars). Leverage is 50-70 times normal, and BIS warns in its quarterly report issued in September. Volatility increases during monetary policy transitions, making it easier for unexpected things to happen. However, I don't think investment grade corporate bonds exceeding 6% or mortgages exceeding 7% will lose to the market as a result.