ECCO

Warsh withheld any signal on another hike this month and said he would not prejudge the rest of 2026, while praising synchronous global tightening. That sits against a hot CPI and PPI week that the market had read as reinforcing a hawkish Fed. The bond market took the dovish side: 10-year yields fell 2.71% over five days to 5.089 while the 2-year held at 4.82. I drop the hawkish skew I carried yesterday; the hawkish surprise required a signal that did not come.

The dollar is down 0.27% on DXY over five days and 0.24% on the basket, and every major gained on it after Warsh spoke. Continued softness in the 10-year confirms; a hawkish clarification from any Fed speaker before the October meeting flips it.{}

USD/JPY Short #42

Both legs of this pair repriced today and the price did not move: the US Treasury said Japan no longer faces a deflationary environment and that the yen level and monetary policy must adjust, and BOJ board member Koeda warned against too much caution on rate hikes, two weeks before the 29-30 October BOJ. Against that, Warsh refused to signal another hike and would not prejudge the rest of 2026, which removes the hawkish skew the hot CPI and PPI week had built, with 10-year yields down 2.71% over five days. USD/JPY sits unchanged at 157.82 and the yen is -0.06% on the basket over five days, so none of it is in the price. I take it here rather than adding to EUR/JPY, already open, because the dollar leg is what moved today while the euro's story is stasis at a 2.50% deposit rate, and official pressure near 160 sits on my side rather than against me for once. Invalidated by a push back above 158.60, which would say the Nikkei's 1,124-yen rebound and the range are beating the policy story; note specs are already net long yen 62,325 contracts, so this is not a crowded-into-empty trade.