Not the BoJ result the JPY bulls were looking for.

Welcome to the Saxo Market Call. Before we get started, it's important we emphasize that the views and opinions expressed in this podcast are those of the hosts and guests and do not constitute investment advice or recommendations. All information provided is for educational and entertainment purposes only. Hi, everyone. It's Friday, 18th of September, 2026, and we have a market that's really in a good mood. I think some of this is on a retreat in oil prices, and perhaps as well as the initial reaction from the FOMC faded, we saw we're pretty much back to where we started from. In fact, if we look at the front end of the U.S. yield curve, that backing out is showing that it does look like that the market is having a hard time adding any more onto what it has already added onto the forward curve of basically three more hikes priced in. When crude oil retreats, it's the independent variable that gets those inflation expectations back down a bit, and it has retreated. We've seen WTI trading below $100 at times this morning, Brent around 102. So yeah, things looking quite positive into triple-witching today for the market, whatever that's going to mean in terms of quote-unquote volatility, who knows. But it was the AI space getting lit on fire by the latest boosting from Bitcoin, saying that chip sales could double next year. And there's even a bit of some fresh meat thrown to the crypto class with the SEC clearing. What is this title? The SEC clearing exemptions to allow venues to trade digital tokens. So this is lighting the world on fire about tokenized assets. There's a lot of noise on, you know, you could tokenize everything. There seems to be a bit of a skeptical case around that. Where's going to be the liquidity if I list I don't know what, I tokenize my persona or something or my trading account and put it out there. But apparently, arguably, I don't really get it personally, but arguably some of those settlement layers and things like that, it could help improve that for things like corporate bonds, perhaps treasuries. It would be kind of nice to be able to more seamlessly go in and out of some of these types of instruments. But to me, it's pretty darn easy to, for example, trade futures, in this day and age. And what is tokenization going to do about that? And some of all these settlement layers are all about ensuring some level of friction to make sure that things don't, as one person argued, you know, it's sort of these gateways to prevent systemic effects from being too rapid in the event of some kind of, you know, aggravated or disruptive event. Whatever, it's out there. Coinbase was happy about it. The stock was up five and three quarters percent and up another two percent after hours. And again, the whole semiconductor space was lit on fire yesterday, up over three percent. This helped drag the Nasdaq one and three quarters percent higher. S&P a little over a percent, but the, you know, the average stock out, or I should say the median stock out there only up about a half a percent. If you look at the broader S&P 500 equal weight index, Nikkei was very happy with a very weak Japanese yen. And I'll get to that in a minute. But again, the S&P 500, the bank of Japan, A, failed to deliver as much as the market expected with a split decision on the go ahead with the 25 basis point rate hike. You know, speaks to a bit of a lack of urgency there. But again, I'll get to that in a second. I'll just round out the equity comments. So we have, you know, and signs of the maybe the stupid returning to a degree. It was things like GameStop, I should say, rallying. This crazy company that's been a meme stock and, you know, really shouldn't be doing what it's doing. But it's just this, it's one of those things, you know, sort of these echoes of that post-pandemic crazy little bubble we had in those types of stocks. It's on the bid again recently. But the biggest gainer, an interesting company I've never heard of actually, called Generac. G-N-R-C is the ticker. They make power generators, of course. Looks like a fairly boring business, but they make big power generators. They make a lot of money. So this is a stock that was pumping earlier this year on this whole picks and shovels theme, had reached a price of almost 300 bucks before correcting all the way back down to below 180 recently. And then yesterday, with the news that they had struck some kind of deal with Amazon for data center backups, so to the tune of $8 billion, the stock rose and into the day 18%. But get this, it ended the day at $2.5 billion. So if you bought at the open, you're down 10% on the day. Dangerous stuff, to put it mildly in this day and age, to trade these types of news items and these types of stocks. But I just thought I'd throw it out there for some flavor of how things are moving. And where are we with equities, really? I talked earlier this week about we're sort of right in this danger zone, this pivot either or zone. You really got that vibe with the quick meltdown post FOMC. The market was spooked by the Fed's hawkishness. And then this suddenly melts away and we're back above. But to me, we're not yet convincingly back above to say that we have an outcome just yet. Unfortunately, I'm not really seeing anything on the horizon that gives us a good event risk setup. But we are post FOMC. Now we're post BOJ. Let's see how the week closes post triple witching and how we find our feet next week. But just do know we are in the pivot zone. The NASDAQ went from that sort of distributive top distribution top that I talked about, you know, really jaggedy formation to suddenly being really quiet and looking very stable. Arguably, arguably bullish. But let's see if let's see if it can we can piece together some kind of rally here. I guess the rally scenario would be oil prices drop 1015 bucks because of whatever miraculous clearing up of the Hormuz straight and and rates go back down. A decent amount. And just those that have gotten short or defensively positioned are just overwhelmed by the constant passive bid. I suppose you could piece together some kind of bullish scenario there. And that would something like that would have to be what we see to get that, you know, to realize that scenario over in macro and FX. So let's go through it here. I've got a Bank of Japan meeting. And again, it was a split decision seven to two. Didn't see like new urgency in the state. I'll provide a link to that in the podcast episode description. But sort of this 158 3040 area, I think 158 42 is the actual 200 day moving average at the moment. It's around where that key Ichimoku technical indicator would be crossing into the price bars. This is a weird lagging indicator in that framework. So it's getting really painful, technically to maintain the downside argument if we're sort of closing up through 158 40. It's getting really painful, technically to maintain the downside argument if we're sort of closing up through 158 40. But sort of this 158 40 area, I think 158 42 is the actual 200 day moving average at the moment. White House, et cetera. So this is quite interesting optics. what on earth are they going to agree? We're coming up on this 12 month. There was this 12 month deal struck back in, it was a Busan, South Korea, essentially to sort of climb down from those crazy tariff levels at the time of a hundred plus percent. But what, you know, what is the new framework? Do they agree to disagree in some kind of long-term framework of disengaging? I don't know, but let's see. And then more impressive, I think on the setup here, given all the testing and stuff that's been thrown at it is the gold market and gold pushing back on 4,400. It has, you know, multiple times failed to sell off through that key support level, but it hasn't really stuck a good impulsive and chunky rally. You know, a lot of that is again, all the stuff that was thrown at it, but that mere resilience or that, that very resilience showing, I think the potential here and looking closely for a follow-up rally here. I'm liking what I'm seeing for gold relative to the news flow, 4,500, 4,550. You know, a rally and stick above there looking quite interesting for some fall through and potentially even, you know, 5,000 level eventually coming into view if it does. All right. What else do we have? We have a bank of England meeting yesterday, mildly dovish on the one hand, because they seem a little bit less committal towards a hiking cycle than was priced in with more than 25 basis points priced in for that November meeting, I guess, assuming some low odds that they would move now. That looks like a little bit of a fall through, but I think it's a little bit of a fall through, but I think it's a little bit of a fall through, but I think it's a little bit misplaced. Certainly we're all waiting for that fall budget just ahead of that November 5th bank of England meeting. But the, the statement was in the monetary policy statement and Bailey's wording was very noncommittal. Some specific quotes about little evidence of a second round effects materializing from what's going on. Yes, we'll have to hike rates if those secondary effects come in, but we're not seeing it just yet. So the market is seeing it further ahead, but the bank of England is really wanting to hedge its bets here. And then you had a, a decent overhaul. Something was expected on, on this QT program, some kind of announcement, but it sort of over-delivered on the dovish side because they essentially said, look, we're going to stop all, all sales of gilts for six months. And we are going to stop entirely any sales of gilts. They own some portion of a 2049 gilts that they won't be selling that and anything beyond that they won't be selling. So that really supported the long end or long dated gilts. In the UK, we saw the 30 year benchmark rallying or sorry, the yield fell, you know, long bonds rallied yield fell 12 basis points yesterday, pretty chunky move. And this was just after we saw these cycle highs since what the late 1990s last week. So this is a key stuff. On the one hand, this is starting negative because of the, the, the policy rate outlook being a little bit lower. But then again, these QT changes do sort of help to stabilize. The UK debt market. So that's a bit of an offsetting thing. Overall, we did see Euro sterling higher. So sterling a bit lower, but there's this really massive and very well etched and clear resistance line in Euro sterling just above zero spot 86. That was the old range low before it was taken out with quite high momentum back in whenever it was early July. And we sort of just barely held below that level since then. So I, it feels like we're gearing up towards something one way or the other with Burnham at the helm and the things that he wants to do towards sterling downside, but let's see. And just wanted to note that technical level. Oh, and I saw a headline somewhere. I was trying to put together the math. I just ran out of time, but there's something about $420 billion of additional debt issuance from these hyperscalers. I believe that was for the 2027 calendar year. I'm a bit shaky on the timeframe here. But the argument is that this is a huge percentage. I think it was something from Goldman Sachs, a huge percentage. If you look at the sort of relative issuance of even US treasuries on the order of half of new issuance of US treasuries for whatever similar timeframe, I guess, longer term coupon bonds next year. So while the overall, of course, load of US debt is in this 30 trillion plus class of those longer coupon bonds, so much of it is getting issued in the front end in the US. And you can look at sort of fresh issuance because they frozen the nominal size of coupon issuance. This is, you know, this is actually in terms of new debt being absorbed by the market. This is a very significant proportion, even relative to what the US treasury is doing. Just for perspective, we talked a little bit about funding stress as a potential aggravator in yesterday's podcast. And on that very subject, I've got a couple of links for you. I will put these in the podcast episode description. One is to, I just love people that have a strong opinion and listening to them. And I think that's a really good way to get people to listen to them. Steven Eisman, a former whatever it was, Neumann something or other, he was a former high level, I guess, fund manager. And he has a podcast called, what is it called? The Real Eisman Playbook. And he said the strong opinion that really everything here, even though all the way to the level of the US economy, certainly the whole nexus, the whole cluster of AI related stocks hinges on open A and anthropic. And he really talks a strong case on that. And he's got a long form podcast in this Real Eisman Playbook on that. But he just had a brief appearance on CNBC that I'll provide a link to, where he's saying that, look, he's, you know, I think it's really overdone this whole focus on safety. And there's no terminated, it's going to kill us all and all this stuff. And then it's really about, there are no modes. So they're concerned, open AI and anthropic, that is, that there are simply no modes around their business. And they need to manufacture a crisis so they can be guaranteed duopoly status, this idea. of throwing up regulatory barriers to make the barrier of entry into AI very, very, very high. So just something worth your thought. And then along the lines of this whole, everything hinges on open A and anthropic, FT Alphaville is out with one of its latest attempts at joining the dots, all these cross commitments in the whole AI space. I mean, it's just an unbelievably complex diagram of all these companies that are cross financing each other to build to do the AI business. build out. Now, you can argue that, look, you know, if we are going to continue to build out AI, and it's going to get even bigger for the next five years running, this type of network of companies would exist anyway. So the only the I guess the real problem is not necessarily that there are all these companies that are relying on each other spending, that's how an economy works. You know, if I spend somebody else benefits and vice versa, as long as the overall activity is going up, and there's productivity gains, and there's prosperity from all of this, it's whether there's the profit generation, and there's productivity that is being enhanced by this spending in the long term, and then all the financing side of the credit side of it is really critical. But anyway, something if you want to get into the weeds on all the different companies and how to connect it, I guess the useful thing in doing such an exercise would be to understand, you know, which if which company when you start to see that it's if and when you start to see a specific large company experiencing issues, how that feeds into which other companies are experiencing issues. And then there's my FX trader piece, as indicated, which you can read as well. So yeah, very interesting how we close today and this week, really with the triple witching for equities, we're in this pivot nervous pivot zone, and the S&P 500, for example, around that 76. Yeah, let's call it 7600 to 7650 area ish, on the cash index, this this huge yen sell off into a or after I should say the Bank of Japan meeting, how does that stick into the end of the week, a critical for the the setup going into to next week for FX as well. Everything just seemed like it's getting scrambled. And then I didn't even mention it. But we have the Germany France yield spread that 10 year spread out at 98 basis points. This thing needs to stop around 100 I would think if it continues much higher with any sort of steady pace, there will be a lot of a lot more focus on that and you'll talk of a new EU sovereign debt crisis, or at least the need for some kind of official response. And what will that mean for, you know, attractiveness of EU bonds? What could it mean for the euro and all these these questions. So stay tuned for that super interesting setup into the week ahead. Stay careful out there. Have a great weekend when you get there. And we'll be back next week with the next Saxo market call. podcast. Thanks for joining today's episode. We're always happy for your feedback and questions of all kinds. To reach out you can drop us an email at market call at Saxo bank.com. That's market call at Saxo bank.com. Saxo serious trading worldwide. We'll see you next week.