The Yen Factor
http://www.bloomberg.com/apps/news?pid=10000101&sid=awNin16JW6lY&refer=japan
There has been a lot written recently about the Yen carry trade and how its unwinding might impact global liquidity and markets. I don't have a feel for its historical impact on the global monetary expansion, I don't think I have read a commentator who has a definite view on this either. Opinions on the possible impact of the unwinding on the Yen carry trade extend from:
a) will have a negative influence on gloabl asset prices to,
b) will induce a global economic implosion.
I suspect we need to sit and wait for July and see what impact a 25 basis point rise in Japanese interest rates has on capital flows in and out of Japan.
It does seem relatively clear that recent global interest rate rises are starting to have a significant impact on speculative excesses and global equity markets are currently reflecting this in sideways and downwards trading cycles.
Over the next year I suspect sentiment will gradually erode as the monetary contraction takes hold and the lack of upward momentum on asset prices turns into a comprehensively downward trend.
There has been a lot written recently about the Yen carry trade and how its unwinding might impact global liquidity and markets. I don't have a feel for its historical impact on the global monetary expansion, I don't think I have read a commentator who has a definite view on this either. Opinions on the possible impact of the unwinding on the Yen carry trade extend from:
a) will have a negative influence on gloabl asset prices to,
b) will induce a global economic implosion.
I suspect we need to sit and wait for July and see what impact a 25 basis point rise in Japanese interest rates has on capital flows in and out of Japan.
It does seem relatively clear that recent global interest rate rises are starting to have a significant impact on speculative excesses and global equity markets are currently reflecting this in sideways and downwards trading cycles.
Over the next year I suspect sentiment will gradually erode as the monetary contraction takes hold and the lack of upward momentum on asset prices turns into a comprehensively downward trend.
posted by Peter at 10:44 am
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