I am biting the bullet and cutting Japanese equity and yen positions. Keeping the short yen on. The reason is twofold:
- disastrous budget that will push 10yr Japanese JGB yields above Bund's at 2.7%; and
- China putting Japan in the crosshairs to make an example of what happens to middle powers that back Taiwan. This will a long drawn out crisis. it removes Japan’s safe haven status. The more so as it is likely Trump will betray Taiwan for a mega trade deal with Beijing.
If anything I would in crease the JGB short more,