It's Time To MOVE and Follow The Leader [Repost with Preview]

Bond volatility has been signaling stress under the surface.

*Note: there seems to have been an error in uploading yesterday's note, and it wasn't sent to the entire mailing list. It should be fixed now. If there are an issues, feel free to DM us.

However, the issue is not narratives but liquidity. Everything is a function of liquidity thus yields. When liquidity falls, the most liquid asset on Earth (U.S. treasuries) are sold for dollars.

Markets Spaz On "Hot" CPI, But The Dollar Is About To Rip; USDJPY

In the note above, I also talked about how the dollar was going to rip; and it has, up nearly four handles since the Fed cut by 50 bps. Remember, this was the cut that was suppose to ease pressure and supply liquidity. It did the oppose.

As I've written over and over, a cutting cycle (let alone a 50 bps cut to start) is not bullish. It just takes time to cycle through the system.

Furthermore:

Momentum and current positioning suggests still some upward momentum for risk assets, but I will begin to long yen once again near 151/152 as long as we continue to see these dynamics play through.

The USDJPY is just shy of 151 (as of writting), and things really are playing out as expected. The FXY (yen ETF) has also begun to trade in the bullish trend, according to the TMS Trading Ranges.

Learn more about the trading ranges here.