Currency dynamics, steepener trade, and defensive assets (with Vonnie Quinn)

Yields cautious up , medium term, interviewee explicit

explicit

NDX

RUT

Oil

Metals up , short term, interviewee implicit

implicit

USD cautious down , medium term, interviewee implicit

implicit

BNY Investments 6.9
Wealth Manager $2000.00B
Geoffrey Yu 8.5

Currency dynamics, steepener trade, and defensive assets (with Vonnie Quinn)

dxy

Notes Asian central banks have room if RMB strengthens, sees strong valuation case for Asian currencies (KRW, TWD, JPY), and mentions need for 'broader dollar softness' for durable yen move. This collectively suggests a view of moderate dollar weakness, especially against certain currencies.

metals

Discusses gold's breakout as a 'defensive element' and part of asset allocation despite higher real yields, and states 'people want to be defensive against inflation and other risks as much as possible. Hence, gold is doing well.' This implies a positive near-term view on gold/metals as a hedge.

yields

Steepener trade for a market focused on fiscal dominance will be in place for some time to come. Explicitly endorses the steepener trade (longer-term yields rising relative to short-term), linking it to persistent fiscal dominance concerns.

10 calls

+5

no reliable edge (random outcomes)

11/28/2025 5:12:01 PM	medium term cautious down	21 days later	+1.78%	-0.89%
11/7/2025 7:00:46 PM	medium term cautious down	21 days later	-0.34%	+0.17%
10/15/2025 2:04:39 PM	short term sharp down	5 days later	-0.33%	+0.49%
8/23/2025 12:19:15 AM	short term cautious down	8 days later	+0.05%	-0.02%
8/14/2025 6:40:18 PM	short term cautious down	5 days later	-0.74%	+0.37%

Show all 5 yields results

Asks how much of recent moves are dollar weakness vs strength in yen/won/yuan after verbal intervention.

Vonnie Quinn
Geoffrey Yu

Today's move is a local issue from Asian intervention. RMB leads Asia; if PBOC tolerates appreciation, it gives others room. Strong valuation case for KRW, TWD, JPY.
Asks what Chinese are thinking and if they will act.

Vonnie Quinn
Geoffrey Yu

Policy is idiosyncratic. Recent data soft, stimulus talk (housing measures). Seeing tolerance for RMB appreciation as a form of stimulus (cheaper imports, helps trade).
Asks about concerns regarding Japan/South Korea, especially divergence between government and BOJ.

Vonnie Quinn
Geoffrey Yu

Market attentive to intervention rhetoric. Positioning data shows strong yen selling Sept-Nov, now tapering/profit-taking. For yen to rally next year, Japan needs to deliver on growth/higher real rates and allow BOJ to hike; confidence needs to be earned.
Asks about US GDP data and implications for Fed and yield curve.

Vonnie Quinn
Geoffrey Yu

Does this data look like an economy needing rate cuts? Still data-dependent. Two things for Fed: equity market performance (Santa rally loosens conditions) and wage data. Many global central banks looking to pivot, not confirming, making cycle different vs 3 months ago.
Asks if US steepener trade is the right trade.

Vonnie Quinn
Geoffrey Yu

Steepener trade for a market focused on fiscal dominance will be in place for some time. Potential central bank surprises in CEE (Hungary, Poland) where governments revising deficit targets higher might lead to hiking despite easing talk. Markets could reward fiscal/central bank coordination to push back on fiscal dominance (e.g., South Africa).
Notes divergence between Swiss franc at yearly lows and gold above $4500, asks what it says.

Vonnie Quinn
Geoffrey Yu

Gold's breakout is an extension of the steepener/defensive trade, even though higher real yields typically hurt gold. Swiss franc is the only developed market currency with bona fide safety status. On margins, people want defensive assets against inflation/risks despite risk-on data. Franc a preferred play in Europe next year.

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