Treasuries: The Dog That Did Not Bark

Japan's Prime Minister Suga will visit US President Biden today. Suga is the first foreign leader to visit Biden in the White House, and the symbolism is not lost on political observers. Japan is the only G7 country not to have sanctions China over its human rights violations in Xinjiang, but the media suggests that Biden Administration wants from Suga is a joint statement about Taiwan. It appears that the last time the US and Japan made a joint statement about Taiwan may have been backing 1969, with Japan's Prime Minister Sato and US President Nixon. At the same time, Suga's popularity has waned as the contagion spreads and the government continues to press for Olympics, which the overwhelming majority are opposed, according to polls. Japan will hold national elections by late October. 

The dollar is stuck in yesterday's range against the Japanese yen. It found support near JPY108.60 and has not been able to resurface above JPY109. The greenback fell for the first four sessions this week and is threatening to end the streak today after settling near JPY108.75 yesterday. There is a $715 mln option struck at JPY109 that expires today. The Australian dollar reached $0.7760 yesterday, its best level since March 19, but is consolidating today and has pulled back before finding new bids near $0.7725. Its 1.5% gain this week (~$0.7740) is the biggest weekly advance since early last November. The greenback is little changed against the Chinese yuan (~CNY6.5225) but has pushed lower every day this week. The dollar's 0.45% decline over the five sessions is the most since the end of January. The PBOC set the dollar's reference rate at CNY6.5288, a little softer than the bank models surveyed by Bloomberg anticipated.  

Europe

As the US announced new sanctions on Russia, news of its decision not to deploy two destroyers in the Black Sea as it had previously intended. The reason for this reversal, according to two (unnamed) officials in a Politico report, was "concerns about escalating tensions between Russia and Ukraine," which ironically was the apparent reason for the "routine transit" in the first place. Informing Turkey of its intentions (under the 1936 Montreux Convention) was done after the Russians had begun amassing troops on the border. One official said that there was a "myriad" of reasons the decision was made not to send the destroyers into the Black Sea, including a desire not to antagonize Putin. At the same time, a summit between Putin and Biden, perhaps in Finland, appears to have begun being discussed. Meanwhile, the ruble snapped a three-day advance yesterday, but the losses were pared after the sanctions were announced, and the ruble is stronger today. The ruble is up a little more than 2% for the week and is snapping a four-week slide.  

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Read more by Marc on his site Marc to Market.

Disclaimer: Opinions expressed are solely of the author’s, based on current ...

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