Week Preview: Will SCOTUS Rule on Tariffs? Eight Fed Members to Speak While Markets Price in Nearly 65 Basis Points of Rate Cuts This Year
Market Movements Following LDP's Unexpected Win
The previous week opened with a surprising triumph for the LDP in Japan. Contrary to widespread predictions of a market downturn, both the yen and Japanese government bonds experienced gains. This suggests that traders had already repositioned their carry trades, reducing the yen's role as a funding currency.
Meanwhile, early in the week, news emerged that Chinese authorities were advising domestic financial institutions to reduce their exposure to US Treasuries. Despite this development, along with stronger-than-anticipated US employment figures for January, the yield on the 10-year US Treasury note dropped by nearly 15 basis points—the largest weekly decline in five months. By the end of the week, yields had fallen below 4.05%, marking their lowest point in over two months.
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