BoJ to pause as a stronger Yen takes away some cost-inflation pressure but also that of the Trump administration

President Trump’s “Liberation Day” has additional complications to the Bank of Japan (BoJ)’s endeavor to normalize its monetary policy further. In addition to the 10% general tariff, the US government had imposed 24% reciprocal tariff on Japanese goods, which were temporarily lifted on April 9th and now under a 90-day negotiation. As Japan’s trade surplus with the US remains substantial (Chart 1), the scope of the negotiation is broad, ranging from agricultural products, national security and non-tariff barriers including what the Trump administration considers a very weak Yen.Given the pressu...

Hybrids and sub insurance could benefit from a further recovery

Credit markets rallied further after US President D. Trump softened his tone toward China on tariffs as well as toward J. Powell from the Fed. And this time, US$ credits were, logically, the first one to benefit from that change in attitude, with US HY spreads tightening by 53bp vs swap (24bp “only” for €HY), while US IG spreads tightened by 11bp (vs between 0 and -2bp for €IG spreads, see chart opposite). €-credit wise, the outperformers of the past week were AT1 first (-31bp), followed by corporate hybrids (-14bp) largely outperforming their senior counterparts (-0.5bp) even beta-adjusted...

Should you be putting any stock in the rebound?