Thursday 22 may

Two words at the forefront of the markets mind at the moment are BOND YIELDS.

Although by long term historical standards, yields are relatively low. In the modern world, the prospect of a US 10 year above 5% is causing the market a little concern.

Even though it's citied any inflation rise caused by tariffs will be 'temporary', the administration's proposed TAX BILL, plus deficit concerns, are adding to the worry.

It has caused me to be a little more attentive to the potential of 'risk off ' trades, essentially, after being a little perplexed by recent JPY and CHF strength, I now have a bone fide reason to trade them long. Today's note that the BOJ are currently not considering slowing the rise on JGB yields, adds to the possibility of further JPY strength.

I am still aware that 'risk on' could return at any moment. But as mentioned on Tuesday, it would take a fresh narrative before I trade a 'risk on bounce'.

The result of today's TAX vote and possibly PMI data could set the tone into the weekend.

Please feel free to ask any questions at all: johnelfedforexblog@gmail.com