That is the question. My headlines are a ceasefire in Gaza, German inflation stable and BoJ intervention to prop up the Yen.
Which one is driver is key, that is the question. It is likely a combination of all 3 that is driving today’s market moves. It seems to me that the real economy is holding up better than expected heading into the summer: I am not following all earnings releases but that’s what my cursory reading of news headlines indicates to me. There is, however, the old saying to “sell in May and go away”. This may indicate that portfolios are almost rebalanced post Q1 earnings, and institutional investor annual strategies have been approved. To me, I haven’t had an eye on the yen. Any Yen strength likely implies greater margin requirements to fund Yen-denominated JGB shorts used for leverage. Of course, any diminishing of the risk of escalation in the Middle East is likely to remove one brick in the ceiling that the market currently sees.
I am not happy with my trade today.
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