Did Bank of England (BoE) and Bank of Japan (BoJ) combined market interventions at over $100 Billion cause distortions in the U.S. Dollar market?
Did Bank of England (BoE) and Bank of Japan (BoJ) combined market interventions at over $100 Billion cause distortions in the U.S. Dollar market? Thus leading to a dramatic sell off of in U.S. Dollar futures and a rise in equities and fall in the short end U.S. yields. Above chart shows the YEN, Pound Sterling and U.S. Dollar, note the white vertical line/s showing the BoE intervention of 28th Sept at 70 Billion US, to shore up the sterling and buy long dates gilts (bonds) and and the BoJ intervention of 20th Oct at 37 Billion US.
In doing this, both Central Banks have set of a wave of inflation, namely energy, but more so the oil price. Note the separate pane beneath showing the oil price between those two intervention dates: 28th Sept and 20th Oct, the oil price was at $81, after the $100 Billion U.S. Dollar sell off, the oil price has since risen $7 dollars to $88. Now, also note the 10 YR break even inflation rate, once again over that period of BoE and BoJ market intervention, the rate sat at 2.15% rising to a high of 2.60% currently settling at 2.44%.
Bet probability via CME FedWatch tool are up over 90% that the Federal Reserve will increase rates by 75% https://www.cmegroup.com/trading/interest-rates/countdown-to-fomc.html
Comments
Post a Comment