A few things here and there

One of the market surprises post the BoJ widening of yield curve control has been the weakness in the yen that has it below where it was in early July and about 3 handles softer than where it stood right before the BoJ move. It got over 145 overnight but is now about unchanged on the day. I was definitely expecting a stronger yen and am confused by the move. There was no new news I saw out of Japan overnight but JGB yields did move higher with the 10 yr JGB yield up by 3 bps and the 40 yr yield higher by 5 bps to 1.76%. Both though are just below the spike highs post YCC widening. And I will repeat my belief that the BoJ move did contribute greatly to the rise in long end yields in Europe and the US.

Maybe the yen weakness is following the selloff in the Chinese yuan as the distress in parts of their residential real estate market becomes headlines again with Country Garden breaking down. Country Garden has mostly focused on non-Tier 1 cities, was a respected builder for the last few decades and its bust is thus hugely important. On the other hand, cleansing the Chinese residential real estate market of all its excesses and debt is a long term good thing. Country Garden has a $ denominated bond that matures in April 2024 that is trading at just 8 cents on the dollar vs 87 in February. The Hang Seng property stock index closed down 2.4% and is lower by 55% from the 2019 peak. The Shanghai comp was down by .3% and the H share index in Hong Kong by 1.8%.