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Remember on Monday how Japan’s central bank was wrecking havoc by raising interest rates?

Well, they’ve changed their mind.

The BOJ came out yesterday to tell the world that they won’t raise interest rates amidst turbulent markets so risk assets bounced strongly off the lows.

The “carry trade” (borrow Yen at near zero interest, buy assets) was partially unwound through the chaos, and the BOJ didn’t like the pace at which it was unraveling.

No market bounced harder than the market beat up the most - the Japanese NIkkei, tracking Japan’s top ~200 companies. The Nikkei now sits about 17% higher than the low set on Friday.

Markets can now revert to trading off of US Federal Reserve interest rate expectations, US treasury liquidity conditions, Donald Trump vs Kamala Harris victory odds and AI productivity hype.

We still expect global central banks to juice markets in unison in the coming months.

We’re watching relative performance closely as markets bounce - we think it’s revealing to see what assets are bid up the most aggressively in times like these.

So far Solana has been the most impressive crypto asset on the bounce, while Apple, Meta, and Uber have shown relative strength amongst tech stocks.

BOJ Has Change Of Heart, Promises No More Pain

WHAT HAPPENED

• BOJ Rate Hike Reversal: The Bank of Japan (BOJ) hiked rates by 25bps last week, triggering a historic stock market crash.

• Deputy Governor's Capitulation: BOJ Deputy Governor Shinichi Uchida announced no further rate hikes during market instability, signaling a reversal of the recent hike.

• Market Reactions: The yen plunged over 2% against the dollar, while Japanese stocks soared post-announcement.

WHY IT MATTERS

• Market Instability: The BOJ's actions led to unprecedented market volatility, with the Nikkei and Topix experiencing their largest point crashes.

• Policy Implications: Uchida's comments indicate the BOJ's unwillingness to continue tightening monetary policy in volatile conditions, potentially halting any future rate hikes.

• Currency Impact: The yen's rapid decline signals a return to the carry trade, potentially leading to new record lows and exacerbating Japan's economic challenges.

• Global Effects: The BOJ's decision may influence other central banks and global markets, particularly benefiting US stocks as the carry trade is re-established.

Key Takeaway: The BOJ's capitulation underscores its struggle to balance political pressures and market stability, highlighting the broader implications for global financial markets.

Zerohedge

Crypto Roundup: Solana Surges On The Bounce & Eric Trump Falls In Love With DeFi

WHAT HAPPENED

• Crypto Swings: Bitcoin, Ethereum, Solana, and XRP saw major price fluctuations amid a broader market sell-off. Bitcoin sits 14% higher off of the weekend low.

• Solana Outperforms: Solana surged 36% off the low, hitting an all-time high in the SOL/ETH ratio.

• Trump's Debt Proposal: Donald Trump suggested using Bitcoin to pay off the U.S.'s $35 trillion debt.

• Teased Announcement: Eric and Donald Trump Jr. hinted at a significant upcoming crypto announcement.

WHY IT MATTERS

• Market Volatility: The crypto market remains highly reactive to macroeconomic conditions and high-profile statements.

• Potential Policy Shift: If Trump’s proposal gains traction, it could radically alter the perception and utilization of Bitcoin in national economics.

• Investor Sentiment: The upcoming announcement from the Trump sons could further influence market dynamics, suggesting a possible bullish trend or new projects.

• Interest Rate Influence: Global interest rates continue to play a significant role in market movements and investor confidence.

• Market Confidence: Institutional buying signals strong confidence in the long-term value of crypto assets, potentially stabilizing the market.

• Global Economic Impact: Central bank policies, like Japan's decision to keep rates stable, influence global market sentiment, impacting crypto and traditional markets alike.

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The BRRR is meant for informational purposes only. It is not investment advice. Please consult with your investment, tax, or legal advisor before making any investment decisions.ll