It's pretty amazing to me that in the context of this chart (US 2y rate minus Japan 2y rate), and a fairly material move lower in the broad dollar index, that USDJPY is unchanged on the year.

Something I've been highlighting in my client notes is that the current richness of USD is the byproduct of three major imbalances. And the residual of these imbalances is the capital account surplus. As we head into 2026, there seems to be a path for some level of normalization.

It's a bit surprising that the hawks on the Fed still have momentum, given how the lead up to todays meeting went. Powell set them up to shape the narrative via his last presser, they tried, and despite that the market pushed the pricing back up on relatively little (Williams).

Market seems to be doing a last cut trade as the Fed is about re-rate UR higher and core PCE lower.

Just incredible numbers in the Chinese trade data for November. Despite tariffs from the US, China's trade surplus is now the size of the economy in Poland, Switzerland or the Netherlands. CNH is too low.

An interesting dynamic in FX is that while the US prices cuts through March of '27, a lot of DMs now have 1y1y rates that trade above their respective policy rates. YTD a lot of the yield convergence between US and RoW has come from above, but it is starting to come from below.

A non-trivial part of these post Trump fiscal announcements around the world is that capital exporters are effectively going to need their money back. Thats meaningful when US NIIP position is 80% of GDP.

Sweet, @jturek18.bsky.social on Odd Lots: open.spotify.com/episode/5miC...

Good time to revisit @jturek18.bsky.social’s “The Dollar’s Imperial Circle” with USD ripping www.newyorkfed.org/medialibrary...