"Crucially, crypto has provided one area of particular concern, with the continued flush lower bringing financial stress for many that will also have positions across a raft of traditional assets. The main piece of news for markets has come from overnight comments out of the BoJ, with Governor Ueda noting that the group will weigh up the pros and cons of a rate hike in December."
"With a huge amount of Japanese funds invested abroad off the back of cheap local borrowing, the continued rise in Japanese bonds does raise risk of liquidity returning home to the detriment of international financial asset prices. With the Nikkei having gained 42% over the six-month from May-October, the prospect of a stronger yen has seen Japanese stocks reverse lower."
Risk assets opened the week weaker despite a prior strong weekly gain, with cryptocurrencies particularly pressured and causing financial stress for investors with cross-asset positions. BoJ Governor Ueda said the bank will weigh the pros and cons of a December rate hike, lifting the yen and pushing 2-year Japanese yields to their highest since 2008. Rising Japanese yields risk repatriation of foreign investments funded by cheap local borrowing, pressuring international asset prices and prompting Japanese equities to reverse after large gains. OPEC+ paused scheduled production increases for early 2026, and geopolitical moves in Venezuela add oil-market uncertainty.
Read at London Business News | Londonlovesbusiness.com
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