Michael Hartnett at BofA leads us off:
Wham! on June 8th2020 NYC announced stage 1 “reopening” after 13-week COVID lockdown, permitting curbside pickup from retail outlets; if you had said then that two years later US retail sales would be up 67%, unemployment would fall by 17 million, inflation would surge from 0.1% to 8.3%, oil would soar from $12/b to $120/b, that a pandemic would be followed by war & famine, you would have been thought utterly mad; but that’s what happened; 2020 marked a secular low in inflation & yields, the beginning of regime change and a decade of social, political, economic & financial volatility.
The Tale of the Tape: BoJ last central bank left fighting the last deflation war (the”Shoichi Yokoi” trade*…yen-14% YTD); Kuroda vowing unlimited bond buying to defend YCC policy which in past 6 years has led to…wait…0.0%Japan GDP growth & 0.2% CPI; investor “policy incredulity”= yen collapse = (Asia FX war) =BoJFX intervention = capital repatriation to Japan = potential catalyst for summer global risk-off trade.
