Hedge funds are shorting the yen with $1.1 billion in bearish contracts
The post Hedge funds are shorting the yen with $1.1 billion in bearish contracts appeared on BitcoinEthereumNews.com. Hedge funds are betting against the yen hard this week, dumping more than $1.1 billion into short positions just days before Japan’s Upper House election on Sunday, according to Bloomberg. Around 12,606 futures and options contracts have been opened against the currency, marking the first net bearish positioning since March. The focus is on whether Prime Minister Shigeru Ishiba’s Liberal Democratic Party (LDP) can avoid a collapse. The LDP already holds a minority in the lower house. Now, polls suggest they’re likely to underperform again in the Upper House. If the ruling coalition loses more seats, investors expect chaos on the fiscal front. Economic policy could become harder to manage, and traders are positioning for exactly that. Traders brace for deeper losses as bond yields rise Aroop Chatterjee, a currency strategist at Wells Fargo, said, “An LDP loss could open the door to more fiscal spending with the opposition pushing for consumption tax cuts, implying wider fiscal deficits and weighing on long-end” government bonds. His team thinks the yen could drop to 150 per dollar if the opposition takes control. As of Friday, the yen was trading at 148.80. MUFG strategists gave a similar warning, advising traders to short the yen ahead of the vote. That message has landed. Traders have watched the currency lose nearly 3% in July, after it had rallied 10% in the first half of the year. That rally was tied to weakness in the dollar at the height of Trump’s trade war, but the mood has now flipped. The situation is being made worse by bond market volatility. Ten-year Japanese government bond yields just touched 1.6%, the highest they’ve been since 2008. The 20- and 30-year bonds are also at levels last seen in 1999. Rising yields are a direct response to fiscal uncertainty, and…
The post Hedge funds are shorting the yen with $1.1 billion in bearish contracts appeared on BitcoinEthereumNews.com.
Hedge funds are betting against the yen hard this week, dumping more than $1.1 billion into short positions just days before Japan’s Upper House election on Sunday, according to Bloomberg. Around 12,606 futures and options contracts have been opened against the currency, marking the first net bearish positioning since March. The focus is on whether Prime Minister Shigeru Ishiba’s Liberal Democratic Party (LDP) can avoid a collapse. The LDP already holds a minority in the lower house. Now, polls suggest they’re likely to underperform again in the Upper House. If the ruling coalition loses more seats, investors expect chaos on the fiscal front. Economic policy could become harder to manage, and traders are positioning for exactly that. Traders brace for deeper losses as bond yields rise Aroop Chatterjee, a currency strategist at Wells Fargo, said, “An LDP loss could open the door to more fiscal spending with the opposition pushing for consumption tax cuts, implying wider fiscal deficits and weighing on long-end” government bonds. His team thinks the yen could drop to 150 per dollar if the opposition takes control. As of Friday, the yen was trading at 148.80. MUFG strategists gave a similar warning, advising traders to short the yen ahead of the vote. That message has landed. Traders have watched the currency lose nearly 3% in July, after it had rallied 10% in the first half of the year. That rally was tied to weakness in the dollar at the height of Trump’s trade war, but the mood has now flipped. The situation is being made worse by bond market volatility. Ten-year Japanese government bond yields just touched 1.6%, the highest they’ve been since 2008. The 20- and 30-year bonds are also at levels last seen in 1999. Rising yields are a direct response to fiscal uncertainty, and…
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