🚨THIS WEEK IS GOING TO BE REALLY INSANE
Not just because of the US-Iran war, but because a lot of things will hit the markets all at once.
1) USDJPY
Today, USDJPY dropped below 160, but it's still in the danger zone.
Any violent move above 160 will likely result in BOJ intervention.
And when the BOJ intervenes, the yen strengthens, which unwinds the Yen carry trade.
We saw this in August 2024, which led to a flash crash.
2) US bond yields
US 10Y yield is close to 4.4%
US 30Y yield is close to 4.9%
They are already at an 8-month high, and any escalation will push this even higher.
Bond yields going higher means the market will sense a bond market crisis, which will be devastating for the markets.
3) US ground invasion
As of today, over 50K American troops are in the Middle East.
Trump is repeatedly calling to capture Kharg Island and even extracting the uranium.
Now if this happens, there are 2 possible scenarios.
If the operation goes smoothly, similar to Venezuela, markets could pump into oblivion.
But if this turns out to be something which could take weeks or months, it would add more uncertainty.
My Thoughts
I think the ground invasion is the most important part here.
If it happens successfully, it could remove most of the uncertainty.
A successful capture of Kharg Island and uranium will push downward pressure on oil and bond yields.
But if anything goes wrong, this crisis could get as bad as 2020.