First cut is the deepestFinancial markets remained volatile last week as the tech selloff spread to currencies, particularly the Japanese yen. These moves were triggered by a weaker-than-expected June US CPI report that fueled expectations of an imminent Federal Reserve rate cut. As we wrote in a previous article, “Expectations of the Fed’s first cut are having the deepest, most significant effect on global capital markets. They are driving substantial moves in the US dollar and significantly impacting currencies, bonds and equity markets.” (see The cut is near, July 15). This combination of the BOJ’s rate hike and the possibility of an imminent, substantial Fed rate cut has further propelled yen’s rise.
