“PAY ATTENTION TO THE YEN. It’s on its way to flapping in the wind and heading to 150, 180, 200+ as rigid Yield Curve Control will force it to happen”: Kyle Bass

The yen is the proverbial canary in the coal mine for Asian currencies. BOJ Governor Kuroda has engaged in several “unlimited” and very public bond buying operations. Their Faustian bargain on rates has two major problems that act simultaneously against Japan: 1. Every bond 1/6

purchased by the BOJ injects that many more Yen into the system. 2. Rates differentials between other developed economies (primarily the U.S.) causes Mrs. Watanabe to immediately take those Yen and invest abroad at much higher rates (+250 bps now).The third rail and lingering 2/6

Explosive problem is confidence in the BOJ eroding daily. These ‘disorderly’ moves in the Yen break confidence in control. Market forces can turn into a panic 😱 once participants realize the yen is completely unhinged (happening now). Once lack of confidence on 3/6

‘Control’ is broken, we will experience an economic catastrophe in Japan…which will have enormous ripple effects on other world currencies. Rigid currency pairs will subsequently detonate and find more ‘market based’ levels. These tectonic movements will cause serious harm 4/6

to those countries that require daily purchases of vital resources (food, energy, basic materials). Hong Kong and China are next. PAY ATTENTION TO THE YEN. It’s on its way to flapping in the wind and heading to 150,180,200+ as rigid Yield Curve Control will force it to happen.5/6

#Japan #BOJ #Yen #HongKong #HKMA #HKD #China #Yuan #ChinaExposed

Originally tweeted by 🇺🇸Kyle Bass🇺🇦 (@Jkylebass) on April 28, 2022.

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