Yen Slides Past 160; Japan's Interventions Prove Futile
The Yen has now weakened decisively above $/JPY 160. Definition of insanity is doing the same thing over and over and hoping for a different result. Every time Japan intervenes, it's a sign of denial and - frankly - insanity. This can't stabilize the Yen. https://t.co/cXfDdIQ9er https://t.co/1sUeJNffM0
Strait Closure, Not Inventory Drops, Drives the Shock
The blow-back to this piece has been immense. Falling inventories are a big deal, but the focus on them risks counting the same shock twice. The underlying shock is the closure of the Strait. It's the same as three months...
Gold’s Safe‑Haven Status Questioned as Dollar Rises
An ECB report this week created the impression gold is surpassing the Dollar as a safe haven. It's the other way around. The Dollar in this shock rises when risk aversion goes up, while gold falls. It's the safe haven...
Half‑capacity Gulf Limits Price Surge, No New Highs
I first put out this chart on March 19 when markets were in full panic mode. The point was that the Persian Gulf operating at half capacity implied a rise in prices of 60-80 percent. We're at 60 percent now,...
Japan's Yen‑buying Intervention Drove May US Yield Spike
Japan's official FX intervention in May to lift the Yen was massive (gray bars). When Japan intervenes like this, it has sells US Treasuries (blue) to get the Dollars it then uses to buy Yen. This will have played a...
Predicted Oil Stability and Iran Blockade—Proved Right
This is my discussion on March 19 with @paulkrugman where I argued: (i) oil prices wouldn't rise much more because Strait of Hormuz disruption was priced; (ii) the US needed to blockade Iran, which happened on April 13. My views...
Russian Oil Discount Vanishes as Deficit Boosts Demand
The discount on Russian oil (blue) versus Brent (black) disappeared in April. That's due to two things. First, the global oil market was in deficit, making Russian oil more desirable. Second, US sanctions waivers removed the stigma on buying Russian...
Japan's FX Moves Losing Impact; Yen Must Plunge
The clock is ticking down on Japan. The half-life of its FX interventions is shortening. Markets see these are just performative and don't actually do anything. Japan is in a debt crisis and needs a new approach. For that, the...
Oil Decline Fails to Boost Yen Amid Yield Gap
The fall in oil prices should be giving a lift to the Japanese Yen, but that isn't happening. The gap between 30-year yields versus the rest of the G10 and the trade-weighted Yen remains as big as ever. A sign...
South Korea Offsets Saudi Oil Drop with Canadian Surge
How bad will the hit to GDP be from this oil shock? We're starting to get trade data from key Asian countries. South Korea's imports from Saudi Arabia fell 40% (top left), but imports from Canada rose 180% (bottom left)...
Korea's Import Shift Thwarts Brent $200 Surge
Why did Brent not go to $200? Korea saw a big drop in oil imports from Saudi Arabia, but was able to offset that almost entirely by ramping up imports from Canada and Malaysia. The massive supply crunch that apocalyptic...
Oil Prices Will Drop as Markets Anticipate Normal Shipping
It'll obviously take time for shipping traffic through the Strait of Hormuz to normalize, but don't fall into the trap of thinking this means oil prices will stay high. Markets are forward-looking, so they'll price normalization long before it happens... https://t.co/sVpm56J5Xu...
Dollar Surge Temporary; Post‑war Fed Likely to Cut Rates
Rate differentials have moved massively in favor of the Dollar (black) and are lifting it against the G10 (blue). But this is a false dawn for the greenback. If the war ends, we'll go right back to pricing cuts for...
Oil Supply Tightens Soon Amid US‑Iran Standoff
One of the biggest questions markets have in the standoff between the US and Iran is when the supply crunch in oil really hits. In our latest blog post, @econ_harris and I lay out a timeline for how much oil...
Erdogan's Power Grab Drives Turkey's Decade‑long High Rates
The price Turkey pays for Erdogan's relentless push to stay in power is sky-high interest rates that have taken the country back to the early 2000s. Interest rates these days are far above Turkey's EM peers and we're closing in...