00:00So, Mark, let's start off with the trajectory of the Fed.
00:03What are you expecting this week?
00:06I mean, 25 is baked in, but what else are you expecting to hear from the U.S. Central Bank?
00:11Well, everybody wants to see how hawkish of a cut it is because we know there are a lot of dissenters.
00:18I can count basically six out of the 12 voting members of the FOMC who expressed some concern over inflation.
00:27And so we'll have to look at how many dissenters there were and how Chairman Powell handles the Q&A session to see how guarded they want to be about further rate cuts going forward.
00:41But for the record, we still expect another rate cut in January and then one more in March.
00:48What is this going to mean for Asia currencies, including the yen?
00:52And there's some expectation that the BOJ will have to hike and then keep hiking for us to see more sizable appreciation in the currency.
01:01I think that's probably right because they have a significant balance sheet they can also offload to help tighten monetary policy.
01:09So we are looking for a rate hike in Japan this month.
01:15Then we're looking for one more in June next year.
01:18So that would take them up to a policy rate of 0.75 percent, which still leaves real rates deeply negative because their inflation is at 3 percent.
01:30So I would expect some appreciation in the yen, but I wouldn't expect it to skyrocket.
01:37And if you compare now to that last time there was a surprising change in the BOJ and a big reversal in the yen,
01:46there were a lot of short positions back then that needed to be covered.
01:50And now, in fact, people are on average slightly long the yen.
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