JPY 147 plunges on US inflation Derivatives 'risk'

An 8.2% increase in the CPI in September on US inflation caused the yen, which has a wide interest rate gap, to surge to 147 yen, and President Biden acknowledged a recession for the first time, and the structured derivatives CLO showed a “rise of uncertainty”.
The U.S. Bureau of Labor Statistics' 'September Inflation Rise by 8.2%' report showed that rent rose 0.8% in September despite a 4.9% drop in the gasoline index due to a surge in U.S. crude inventories, rising from the previous two months and rising 7.2% last year. It recorded the largest increase since then.
The consumer-directed food index rose 0.8% in September after August, with wheat flour turkey butter reaching new highs on a 1.6% rise for fruits and vegetables and 0.9% for grain bakery, and food costs up 11.2% over the past year. did.
"This is the first time the Dow Jones Industrial Average has all fallen at least 500p and rose at least 800p in a single trading day," the Wall Street Journal reported. It reminded me,” he said.
By the closing price on the 13th, the Dow Jones Industrial Average rose 2.8% from 827p, the Nasdaq rose 2.2%, and the S&P 500 rose 2.6%.
In the New York foreign exchange market on the 13th, the yen temporarily plunged to 1 dollar = 147.5 yen, depreciating for the first time in 32 years since August 1990.
Yomiuri said on the same day, "As the interest rate differential between Japan and the US is widening, the buying of the dollar is dominant in favor of investment and the yen." In order to control this inflation, the prospect of a significant increase in interest rates was strengthened and the sale of yen proceeded.”
Yomiuri continued, “The yen was lower than just before the government and the Bank of Japan intervened in the foreign exchange market on September 22 to buy the yen and sell the dollar (1 dollar = 145.90 yen), and market participants were increasingly cautious about further intervention. ” he said.
The WSJ reported on the surge in Treasury bonds: “Volatilities in the UK government bond market following a massive debt support tax cut have triggered margin calls to pension funds and rippled through the US junk debt market.”
The WSJ previously reported on the 11th article, “The UK crisis spills over to junk debt in the United States,” saying, “The price of mortgage obligations has been hit hard by the collapse of the British pound and the loosening of British pension investment.” “Fallout has hit a trillion-dollar market for mortgage obligations on Wall Street.”
Regarding the US transition of the UK financial market crisis, the WSJ said: “It hit the trillion-dollar market for US mortgage obligations. "Many of them have sold CLO bonds to meet margin calls, and the price of the security has fallen far below its intrinsic value," analysts and fund managers said. did.
CLO, a derivative product, is a leveraged product that disassembles bank loans of highly indebted companies into pieces and resells them as securities.
JPMorgan estimates CLO sold this year at $24.7 billion.
It is known that BlackRock, the largest private equity fund in the United States, has invested heavily in CLO, which has advanced into Korea by consulting the Korean Ministry of Strategy and Finance.
"The demand for CLOs is extraordinary," Rick Ryder, BlackRock's chief global fixed income chief investment officer, told The WSJ on Wednesday.
"I don't think there's going to be a recession. If it does, it's going to be a very mild recession," Biden told CNN on Monday.
President Biden said in a statement on Sunday that "prices are still too high", accusing Republicans opposing the inflation-reduction law.
The Wall Street Journal reported on the same day that "mortgage rates rose sharply in a head-turn reversal on the 13th after investors decided the new evidence of high inflation wasn't as bad as initially appeared," the Wall Street Journal said. , this adds to the pressure on the cooling housing market and is likely to accelerate the shakeout of the circulating industry.”
The U.S. Energy Information Administration (EIA) crude oil inventories increased by 99 million barrels over the week to 4391 million barrels on the 7th.
Brent crude oil futures fell 15 cents (0.2%) to $94.42 a barrel until 0034 GMT on the 13th, and West Texas Intermediate (WTI) crude oil futures of the US fell 21 cents (0.2%) to $88.90 a barrel on the 13th.
“Excluding volatile food and energy prices, the core CPI rose faster than economists expected,” the WSJ said. This means that the Fed will not be able to scale back its rate hikes for the time being."
The Washington Post's Fed correspondent Rachel Siegel said: "September price increases were driven by rising costs for shelter, health care, health insurance, new cars, home furnishings and education. The high prices in all of these categories lasted for several months, and the fuel oil index was up 58.1% year-over-year, even partially offset by a 4.9% decline in gasoline prices, which continued to decline during the summer peak.”
As for rising housing costs, he said: “Rents are one of the most important parts of the inflation report known as the Consumer Price Index, and rose 0.8% in September, slightly higher than in the past two months. "The Fed's rate hikes will increase mortgage costs and help ease home price pressures, but it immediately hit other parts of the housing market," he said. Or they will increase their budget to move to cheaper housing.”

Unlike the US, Japan, and UK, Korea's Consumer Price Index excluded the cost of owning housing from the statistics from the beginning, and housing cost led the US inflation.