Business

"Investors" are buying bonds and stocks since the US equity market opened... despite oil plunging and USDJPY at lows of the day...

What happens next?

By EconMatters

One of the reasons why the USDJPY tumbled overnight is because of a set of comments by one of the most hawkish BOJ board members, Takehiro Sato, expressed pessimism about the economy and the central bank’s strategy, saying in a speech Thursday that the BOJ won’t be able to reach its 2% inflation target as forecast and negative rates won’t work to boost investment.

ISM New York's purchasing managers survey collapsed in May from 57.00 to 37.2 - the lowest since April 2009. The bloodbath is the biggest monthly drop since May 2007. While 'hope' rose rather stunningly from 56.0 to 68.0 - the highest in years, current employment and 'quantity of purchases' both plunged to cycle lows.

So much for that April bounce!

Note we have adjusted the chart by centring ISM NY 50 print at 0 which separates expansion from contraction.

Transitory?

One week ago, in an interview with Bloomberg, Bill Gross made a surprising announcement when he said that he was starting to short credit. As he said at the time, "It’s really hard to change your psychological makeup and to be a hedge manager that is comfortable with being short,” he said during his interview. “I’m working on it, because I’m an investor that ultimately does believe in the system, but believes that the system itself is at risk."