Is there a need to change the scenario due to falling US rates?! [From Shirima Toshi-o's newsletter]
From the investment e-newsletter “Shima Rikio’s Practical Real Trade” by Shima Rikio, provided by GogoJungle, here is today’s issue.
The decline in U.S. interest rates shows no sign of stopping. Since the U.S.-China trade war has been temporarily interrupted, markets were expected to move more on the risk-on side, but stock prices did not rise, and U.S. long-term rates fell below 2.00% to 1.97%. It may be necessary to revise the scenario.
Why aren’t U.S. rates rising? Even though the U.S.-China trade war has been shelved, the impact of the third round of tariffs on China, raising duties from 10% to 25%, may begin to affect the real economy gradually. Also, with pressure from the administration, a July rate cut is almost certain, so the market may already be expecting rates to fall anyway.
If so, sooner or later the market will return to its original dollar-weak trend.
I would like to restart the short position on USD/JPY and the long on EUR/USD. However, there are news reports that Vice President Pence canceled his schedule and hurried back to the White House (the spokesperson says this is not a cause for concern), and that President Putin held an urgent meeting with the defense minister. These developments have caused the dollar to drop a bit, so the timing isn’t ideal. I would like to enter the market once it has retraced a bit.
“Shima Rikio’s Practical Real Trade”—quoted from (Shima Rikio).
According to Shima, the decline in U.S. rates seems to reflect concerns about the future impact of tariffs on the real economy, as well as market expectations of rate cuts in July. There appear to be more risk-averse news, so caution is warranted when participating in the current market (Editorial Department).
