Gold and Silver Rip Higher as Takaichi Trade Unwinds, the TACO Playbook Fades
Yen whiplash, fading TACO, and surging gold signal a new bout of policy-driven volatility.
Key Takeaways
Yen Intervention Flags a New Bout of Developed-Market Bond Fragility: Japan’s intervention triggered a sharp yen reversal, unwinding the “Takaichi trade.” The signals for coordinated intervention by the U.S. and the Japanese authorities highlight how fragile developed-market duration has become as fiscal ambitions collide with funding realities.
U.S. Policy Chaos Drives a Rush to Emerging Markets Along with Gold: Dollar weakness is accelerating the bid for real-asset hedges, with gold above $5,000 per ounce and silver spiking, as the “TACO” playbook loses traction. Precious metals are increasingly acting as the release valve for policy uncertainty and fatigue with repeated dip-buying narratives. Meanwhile, emerging market assets keep performing as the relative risk view shifts.
Political Flashpoints Loom for Markets: Prepare for another roller-coaster year in markets. And we are not even into the noise that will surround upcoming Supreme Court decisions, the choice of the next Fed chair, and the midterm elections. Midterm years have historically been among the weakest for equities, regardless of the fiscal backdrop. There is plenty of excitement over a coming tax-refund boost, but it is a brief bump, not a durable stimulus.
