Debase
October 6, 2025
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–Gold closing in on $4k with GCZ5 3963, up $54. Bitcoin $124k. In France Lecornu quit and in Japan, Sanae Takaichi is poised to become next prime minister…both contributing to the debasement trade. EURJPY at all-time high >175. Nikkei has exploded to a new high this morning, up 54% from April’s low and nearly 5% from Friday (new ath0. JGB 10y yield at new high over 1.68%, while US treasuries are also seeing higher yields going into this week’s auctions: 10y 4.152% (up 3.5 bps from Friday) and 30y 4.76% (up 4.8). The low yield in 10y JGB after the yen-carry scare of August 2024 was around 80 bps.
–Interestingly, in 1982 the Nikkei was around 6900, by 1989 it topped near 40000, a gain of around 33000. In 2012, NKY was around 8900 and is now near 50000, a gain >40000. Of course, the time frames and backgrounds aren’t similar, but the run has been wild.
–French stocks under pressure with BNP Paribas currently 74.38, down around 4.6%, lowest since June. France 5y CDS just over 42 bps, Italy 41 and Greece 43.
–Midcurve SOFR October options expire this week. 0QV5 9693.75^ settled 7.25 vs 9695.0 in SFRZ6. Looks to be 7.5 this morning ref 9693.5. Too cheap in my opinion. 0QV5 9700c around 1.5 currently.
