Thoughts? USDJPY dropped 100 pips at the open, has since rallied, but is selling off again. It is hard to see how this could fail to lead to large movements of capital into or out of US$ denominated secs.
Yuah Move Likely to Boost Asia Currencies http://online.wsj.com/article/SB10001424052748704638504575318371397044614.html?mod=mktw (no, I am not Asian ;-)
Chinese Markets Likely to Rally on Yuan Move http://online.wsj.com/article/SB100...0750288856.html?mod=mktw#articleTabs=comments
Looking at this from the point of view of the treasury desk (I worked on the corporate desk, they set the rates), then it seems the risky scenario is the following. If a 30% depreciation of USDCHY is in the works, that means I want way more yield for my long bond (doesn't mean I'm going to get it, but I sure do want it). It's hard to say how much Chinese buying supports the long treasury market, but I suspect we will find out. Increase in 30YR treasury rates would be interesting (but no one ever listens to us bond guys).
I am not interested in political mumbo jumbo, I want to make money. Please save your threats for another board and/or direct them at the relevant persons.
Stocks & bonds are supposed to go in the opposite direction on good news. Bonds thrive on bad economic news. I'd watch the Morgan Stanley Cyclical Index - CYC. It should outperform tomorrow, if the markets continue up. If it doesn't, that's a bad sign.