Wednesday, July 31, 2024

Japan, US, Iran, Venezuela, Ethiopia, Russia

“An individual has not started living until he can rise above the narrow confines of his individualistic concerns to the broader concerns of all humanity.” – Martin Luther King, Jr.   ||

Hi everyone! Nooooo, how can it be the end of July already?? Anyway, I hope you’re all doing well, and withstanding the heat if you’re in the northern hemisphere.

As I mentioned yesterday, I have to skip publication tomorrow – taking our senior dog in for surgery.

And I’ll be taking a summer break next week, Wednesday-Saturday, back in your inboxes the following Monday.

If you find Crypto is Macro Now useful or informative, would you mind sharing it with your friends and colleagues, and maybe encouraging them to subscribe? ❤ I’d really appreciate it! 

IN THIS NEWSLETTER:

• Japan raises rates

• US jobs

• Political moves

• Middle East tensions ratchet up

• Venezuela simmers for now

• A painful devaluation for Ethiopia

• Russia embraces crypto, sort of

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IN BRIEF:

Japan raises rates

Well, well, the Bank of Japan did it – it raised rates, for only the second time in almost 20 years. What’s more, it did so much more than even conservative estimates, by 0.15 basis points instead of the more typical 0.10 (Japan raises in smaller increments than the US). And, it announced it would be halving the amount of bonds purchased in the market.

(chart via TradingView)

Japanese yields jumped, and the yen strengthened against the USD.

(chart via TradingView)

A bigger deal than the actual move today is the message that the BoJ is now entering a regime change. After so many years with negative interest rates, Japan is stepping up to more actively manage its monetary policy in support of economic growth. This will have global repercussions, especially given its competition with China in regional trade, and especially given its recent boost to defence spending.

As I mentioned yesterday, the risk now is of a strong repatriation of Japanese funds from US assets to local bonds. Much depends in the short-term on Fed Chair Jerome Powell’s comments later today in his post-FOMC press conference, and how clear he is on the likelihood of a US cut in September.