Russell Napier, co-founder of the investment research portal ERIC, said in a recent installment of his"Solid Ground" macro strategy report that investors have been provided with a glimpse of the impact a change in Japanese monetary policy can have on U.S. financial markets.
"The narrative for the past few decades is that the US is, in economic and financial terms, an island largely un-impacted by such global trends."The Japanese currency is up around 8% against the U.S. dollar over the last month, trading at 148.84 a dollar on Friday. It marks a stark contrast from the run-up to the July 4th U.S. holiday, when the yenThe Japanese national flag is seen at the Bank of Japan headquarters in Tokyo on July 31, 2024.
Cedric Chehab, global head of country risk at research firm BMI, said Friday that a combination of factors have been at play over the past roughly 10 day-period. However, he insisted"corrections like this are absolutely normal" at this time of year. Chehab said one factor that some investors appeared to be forgetting was that there is typically a seasonal rise in equity market volatility over the July-October period.Separately, Napier said that a recent downturn in U.S. equities was likely to have significant ramifications for yen carry-trade investors.