Global markets: War and peace risk narrative – Rabobank

Rabobank's RaboResearch Global Economics & Markets team suggests the Bank of Japan may tighten monetary policy again, potentially marking the first back-to-back hike in decades. Former BOJ director Momma hints at a 25 basis point increase, a move that could weigh heavily on the Japanese Yen, particularly the carry trade. The BOJ is set to decide at the end of October, but Momma sees the prospect as a "real possibility" with a 20-30% chance.

This potential historic move in the markets brings back memories of past central bank actions. The first 25 basis point hike left the Yen in a precarious position, leading to questions about the impact of a second hike. With US yields near multi-year highs and inflation risks from oil prices and Fed rate hikes, the US Dollar remains a safe-haven currency, bolstered by the US-Iran standoff and driving USD/JPY lower.

Meanwhile, gold, US bond yields, and Zcash are all experiencing downward pressure due to rising inflation expectations and the Federal Reserve's aggressive stance on interest rates.