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Rising US rates prompt speculation of yen intervention, as USD/JPY suddenly plunges

We’ve had another day where rising US yields have continued to exert downward pressure on stock markets with the DAX sinking to a new 6-month low, while the FTSE250 has fallen below its July lows to its lowest levels this year, after the latest US JOLTS data prompted another spike in yields.


The FTSE100 is faring slightly better, although it is also under pressure, slipping to 3-week lows over similar growth and interest rate concerns, while speculation is abounding that the Bank of Japan intervened to push USD/JPY back below 150.00 after US yields pushed higher on the August JOLTS numbers.   

Boohoo shares have fallen sharply to six-year lows after following in the footsteps of sector peer ASOS last week, and reporting that it expects to see full year revenue decline by between -12% and -17%.

H1 revenues also fell short of expectations coming in at £729m.1m, slipping to a £9.1m pretax loss, although like ASOS last week Boohoo revised its full year EBITDA margin higher to between 4% and 4.5% from 3.95%. Gross margins were also better than expected at 53.4%. Today’s market reaction has been less forgiving than was the case with ASOS last week, which managed to finish the day closing well off the lows of the day.

The key challenge for both of these companies is the increased focus on profitability and margins while sensible is having a serious effect on sales growth targets. Investors will have to determine whether that is a price worth paying in the longer term, and whether the shares are already cheap enough.

If recent share purchases by Frasers Group in both ASOS and Boohoo are any guide the perception would be that the shares are probably cheap enough and that a focus on profitability and margins improvement is preferable to sales growth for the sake of sales growth. This might suggest that initial investor reaction might be too harsh, and that there is long term value and that a little more patience may be required.

Nonetheless today’s revenue warning, following ASOS numbers last week has prompted similar weakness in the likes of Zalando over in Germany.  

Consumer appetite for Greggs sausage rolls appears to have driven a 20.8% rise in total sales, and a 14.2% rise in like-for-like over the last 13 weeks with the bakery chain maintaining its full year guidance. Over the year-to-date Greggs opened 82 net new shops with another 135-145 net new shop openings in 2023. Greggs said that cost inflationary pressures were now easing which should help it meet its targets


Another multiyear high for US 10-year yields has seen US markets open lower, although a pullback from the highs, initially saw stocks pull back from the lows of the session, until the increase in the August JOLTs numbers upended the apple cart, sending yields higher again and the S&P500 to 6-month lows.

If we continue to see yields move higher with speculation that the US 10-year yield could push up to and beyond 5%, the pressure on US stock market valuations could become more intense.

Today’s job vacancy numbers for August showed a big jump from July, rising from 8.9m to 9.6m in a further sign that the US labour market remains in rude health, keeping upward pressure on both the US dollar and on yields.

Despite some weakness in tech, HP shares are having a good day on the back of an upgrade from Bank of America. Chipmakers are also higher with Intel and Micron edging higher.

Netflix shares have popped higher on reports it plans to raise prices on its ad-free service now that the writers strike has ended.

We’re also seeing downward pressure on the likes of Tesla and Rivian after both announced their latest Q3 production and delivery numbers.  


The Australian dollar is the worst performer slipping to 11-month lows after the RBA left rates unchanged at 4.10%, as expected. Governor Bullock maintained that further rate hikes might be necessary due to sticky services inflation, although the economic outlook remained very uncertain, which suggests the bar remains quite high when it comes to another 25bps hike.

There’s been a sliver of good news for UK consumers after monthly grocery shop price inflation fell by 0.1% in September, while annual shop prices slowed from 6.9% to 6.2%. Annual grocery price inflation slowed to 9 9% the first time it’s been below 10% in over a year. The gradual slowdown in inflationary pressures is helping to ease concerns over further rate rises from the Bank of England which in turn is acting as a drag on the pound, which has slipped below 1.2100 against the US dollar for the first time since mid-March.

The US dollar initially continued to edge higher pushing above the 150.00 level against the Japanese yen, in the aftermath of the latest JOLTS data which pushed yields higher. The move above 150 proved short-lived, with the Japanese yen suddenly surging higher over concerns about possible Bank of Japan intervention, sending it into an air pocket which saw it drop as low as 147.30 before rebounding.


The recent slide in crude oil prices from the peaks last week at $97.50m after the strong rally seen from the June lows could signal that we may have seen a short-term peak. The strength of the US dollar, as well as higher rates, along with concerns over weaker demand appears to have prompted some profit taking and if the past two day’s sharp fall is sustained, we could see further falls towards $85 a barrel.

Gold prices are also feeling the pressure from the rise in yields slipping to its lowest levels since early March, with further weakness increasingly likely given the current strength of the US dollar and upward pressure on yields with the February lows just above $1,800 the next key support.


Tesla released its latest quarterly sales update yesterday including details of the number of vehicles delivered. Critically this fell short of expectations, leading to some moderately elevated levels of price action on the stock. One day vol printed 89.62% against 66.45% for the month.

Wheat prices may have sold off heavily at the end of last week but downside pressures here proved to be short lived. Monday’s rebound saw more than half of those losses being recouped, with concerns surfacing again regarding the stability of global supply. One day vol on wheat printed 51.7% against 36% on the month.

US equity indices started the final quarter of 2023 with a rather mixed outlook. Whilst news that Congress had averted a shut down – at least for now – was welcomed, the hawkish tone from the Fed was still ringing clear in the ears of investors on Monday. The NASDAQ lead the pack, closing around 0.7% higher with one day vol of 21.96% against 15.7% for the month.

And after last week’s bizarre lull, activity across crypto assets is once again elevated. The pace with which US government debt is growing is seen by some as reigniting confidence when it comes to digital assets. Bitcoin/USD traded out to six week highs on Monday, lifting one day vol to 58.85% against 28.46% for the month.

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