A snippet from Nomura on China/US, USTs and then the yen,
- market appears to have fully incorporated a potential Sino-US trade agreement and a subsequent recovery of the US and Chinese business climate
But …
- unless more positive headlines/factors than this appear, it will become difficult to target further upside in risky assets
And …
- Unlike risky assets, 10-year UST yields seem to be determined to some extent by the Fed's dovish stance …
- CTA long positions in USD/JPY have gradually levelled off, and systematic trend followers have become careful to follow the upward trend of the pair at the moment. In the case of those targeting a short-term reversal on Japanese export oriented and cyclical sectors, one should consider that USD/JPY will likely run of steam and miss ~113.6 … as further upside of long-term UST yields remains subdued
