Asia open: Investors struggle amid a policy-driven structural bond market reappraisal

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Over the past week, there has been a significant decline in equity markets due to the anticipated negative impact of higher-for-longer US interest rat

. And with little offset from the lower diesel/gasoil yields expected from lighter crude, buyers and consumers could be entering a pain period. While the temporary ban will ease growing energy concerns in Russia and member states this winter, you can't help but think Europe is in the crosshairs here.Forex marketsMarkets initially expected the pound to perform well. Still, the BoE's recent decision to keep interest rates at 5.

It's worth noting that the main factor that could counter further weakness in GBP would be if incoming data surprises the upside, potentially revealing that the recent progress was misleading and prompting the BoE to consider a more assertive response. However, such a shift in policy would likely take time to materialize, so I'm comfortable with a tactically bearish view for now.

While short-lived JPY outperformance is possible on intervention rhetoric, traders would likely view it as an opportunity to position for more JPY weakness, thinking intervention is futile given the wide US vs. JPY yields spread without an actual policy pivot from the Bank of Japan.

 

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