Net spec yen shorts hit 17 yr high, JGB yields/Company notables/AI helps Taiwan and South Korean exports

The weakness in the yen has brought the speculative non-commercial net short position to the highest level since 2007 as of last Tuesday (reported Friday) and from a contrarian standpoint, a rally could come at any time. A few months ago I highlighted the record net short in corn where a 7.5% rally followed. Soybeans had a record short too and then rallied by a similar amount but then pulled back. We're still long fertilizer stocks by the way.

On Friday speaking in DC, BoJ Governor Ueda said "If underlying inflation continues to go up, we will very likely be raising interest rates." As for QE, "Irrespective of what the data will say in the near future, we will like to find a way and timing to reduce the amount of JGB purchases."

The JGB response overnight was another 4 bp rise in the 10 yr yield to .89% to the highest since November. Yields were higher too in the rest of Asia and seen in Europe and the US. We are all in the same bond soup together so what happens there matters for what happens here with bond yields. The yen though still can't get out of its own way and its little changed just under 155. 

Net spec short position in the Yen

10 yr JGB Yield

One common theme with the bank earnings seen so far is that there is no loan growth in total with none specifically with C&I loans. The updated data seen Friday for the industry as of 4/10 saw about a $5b w/o/w drop to just above the lowest level since September 2022. If you have access to the capital markets, you're good. If you don't, you're not so good. That said, the high cost of capital has also limited the demand for loans too. 

C&I Loans Outstanding

Fifth Third Bancorp talked about the benefits of its geographical placement and how it overlays where the IRA legislation has been encouraging spend. They said Friday, "Our footprint continues to benefit in an outsized way from federal incentives to bolster investments in domestic manufacturing and energy infrastructure. The Midwest and Southeast have received more investment per capita than other US regions in industries as diverse as multimodal logistics, semiconductors, batteries and pet food." I didn't know that pet food was part of the IRA.