Photo: Wikimedia Commons
On Monday we highlighted the various gurus who have been urging everyone to short Treasuries, only to see them rally near all-time highs in recent days.Another asset that trades very similarly to US Treasuries is the Japanese Yen, and not surprisingly, there is a large faction of investors who have been calling for a short of the yen or Japanese Government Bonds on anticipation of a gigantic sovereign bankruptcy.
That’s not very scientific, but the scads of results are telling
You know their arguments right? Japan is very old. Japan has a ton of government debt. Japanese exporters aren’t the powerhouses they used to be. And on and on the arguments go.
And yet… here we are. The Yen is now within a hair of a — wait for it — 15-year high against the dollar. When the dollar falls below 84.82, that’s when it will have broken to an all-time low.
The thing is, the best Japan short has been equities. The Nikkei has been a dog for years and years, and yet because of the monster debt, everyone has been piling onto the debt and the currency side, looking for that huge homerun when it all goes to toilet paper.
Good luck (and good luck to those making the same bet with US Treasuries).
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