My own view of markets macro calls, sector ideas, and structured hypotheses. These are personal takes built from research, not financial advice.
23 Jul 2026
From Yen to Franc: The Carry Trade Migrates
What Happened with Japan and Why
Japan kept interest rates near zero for roughly 30 years. With no real return on Japanese debt, investors borrowed cheap yen and put that money to work in higher yielding assets elsewhere. That was the carry trade.
What changed is that inflation finally arrived in Japan, giving the Bank of Japan the justification to start raising rates and remove its cap on bond yields. Japanese government bond yields are now at levels not seen in a generation, with the 10 year at 2.77% and the 30 and 40 year both above 4%.
For carry traders that changes everything. Borrowing yen is no longer free and Japanese capital now has a real reason to stay at home. Both things that made the trade work are under pressure at the same time.
Why Investors Are Now Looking for Alternatives
The carry trade does not disappear just because Japan becomes more expensive. Investors still want cheap funding, so they start looking for the next best option. The trade migrates rather than dies.
Why the Swiss Franc
The Swiss franc is the strongest candidate. The SNB policy rate is at 0.00% and the overnight rate is sitting at effectively negative, meaning borrowing in francs is essentially free. On top of that, the franc is deeply liquid, globally trusted, and politically stable. Not every low rate currency has that combination. It is exactly what carry traders need, and right now the Swiss franc is one of the very few currencies in the world that offers it. So the thesis is that investors begin treating CHF the way they used to treat JPY. Borrow cheap francs, sell them, convert into dollars or pounds, and deploy into higher yielding assets abroad to earn the spread.
The Knock On Effects
When that borrowing and selling of CHF starts happening at scale, the first effect is that the franc weakens. All those investors converting their borrowed francs into other currencies creates consistent selling pressure on CHF in FX markets. In the short run that is actually a benefit for Switzerland. A weaker franc makes Swiss exports more competitive abroad and means the overseas earnings of large Swiss multinationals like Nestlé, Roche, and Novartis translate back into more francs when reported at home. So in the early stages of this shift, Swiss exporters see a real tailwind.
There is also a broader market effect. If global investors are borrowing CHF and deploying it into US Treasuries, European bonds, and emerging market debt, that creates a new wave of demand flowing into those markets, just running through a different funding currency than before.
The carry trade does not die when Japan becomes too expensive it migrates. The Swiss franc is the next funding currency of choice. Borrow CHF at zero, sell it, deploy into higher yielding assets abroad. In the early stages, a weaker franc benefits Swiss exporters. The risk is a violent unwind when the trade gets crowded.
RisksCrowded trade unwind. Carry trades tend to feel safe and predictable for a long time, then collapse very quickly. The problem is that as more investors pile into the same trade, a large hidden short position builds up in CHF across global markets. Nobody is particularly worried while it is working. Then something happens — the SNB hints at a rate rise, inflation surprises to the upside, or a broader market selloff spooks investors into moving to safety. When that trigger hits, two things happen at once. Investors around the world want to buy francs because Switzerland is seen as a safe place to park money in a crisis. At the same time, every carry trader who borrowed francs is frantically trying to buy them back to repay their loans. Both groups are buying CHF at the same moment, which sends the franc sharply higher. To pay back what they borrowed, traders are forced to sell the foreign assets they bought, whether that is US government bonds, European stocks or emerging market debt, regardless of whether anything is actually wrong with those assets. That forced selling spreads the stress far beyond Switzerland into global markets.
Reversal hurts Swiss exporters. The early stages of this trade are good for Switzerland. A weaker franc makes Swiss goods cheaper abroad and boosts the earnings of multinationals like Nestlé, Roche, and Novartis when they convert overseas revenue back into francs. But if the trade reverses and the franc strengthens sharply, all of that goes into reverse. Swiss exports become more expensive for foreign buyers, demand falls, and the overseas earnings of those same multinationals translate back into fewer francs. This could cause Swiss equities to fall in price, and the SNB may even look at cutting rates back toward negative territory as a tool to weaken the franc again.
08 Jul 2026
Oil, Gilts and the Breakdown of the June Agreement
What Happened
On Monday night Iran fired missiles at three commercial vessels in the Strait of Hormuz. A Qatari LNG tanker was struck and caught fire. A Saudi supertanker was damaged. The US retaliated with strikes on Iranian air defences and Revolutionary Guard boats. This morning at NATO in Ankara, Trump said: "For me, I think it's over." The US Treasury simultaneously reimposed oil sanctions on Iran in full, removing the temporary exemption that had been granted under the June agreement, effective immediately.
What It Means for Oil
Brent moved back above $78 overnight. The Strait handles 20% of global oil and gas. When it closed in March, Brent topped $120. The June deal brought it back to $70. This week has reversed a large chunk of that in 48 hours. The 60 day window technically runs to mid-August so talks could resume, but the sanctions waiver is already gone and that is harder to walk back than words.
The Gilt Trade in Reverse
Higher oil means UK inflation reprices upward and Bank of England rate cut expectations go into reverse. In March, gilt yields rose harder than any G7 peer. Bunds were up 42bps, Treasuries up 48bps, gilts worse than both. That asymmetry is structural: the UK imports more energy than Germany and inflation is stickier. The directional case is now short gilts, long bunds. Too early to call it a confirmed trade, but the logic of the original piece runs exactly in reverse.
The sanctions waiver is already revoked, Iran has targeted tankers belonging to Gulf states whose cooperation it needs for any settlement, and Trump's statement came from a formal NATO summit. Until there is a credible signal that the waiver is being reinstated, the path of least resistance for oil and gilt yields stays in the direction this week has already set.
RisksMED The 60-day window is still technically live and Trump has reversed harder positions before.
MED A credible signal that the sanctions waiver is being reinstated would reverse the oil and gilt move quickly.
25 Jun 2026Long Gilts
The US–Iran Deal and Its Effects on Markets
The News
On June 15, the US and Iran signed a Deal ending the conflict that had shut the Strait of Hormuz, which is where around 20% of global oil supply passes through. Oil fell to three-month lows on the news. The deal is not final though. Iran's nuclear programme, sanctions, and Hormuz logistics all remain unresolved within a 60-day window.
Why This Hits the UK Hardest
Energy carries a larger weight in the UK inflation basket than in the eurozone. UK households spend proportionally more on gas and electricity, so oil price moves show up more sharply in UK data. Falling headline inflation gives the Bank of England justification to cut rates faster than currently expected, and the data now supports a move the market hasn't fully priced in yet. When rate cut expectations are brought forward, investors start buying gilts in anticipation, which pushes prices up and yields down.
The Trade
Long UK 10-year gilts, short German 10-year bunds. The ECB has already been cutting more aggressively than the Bank of England this year, which means most of the dovish repricing in European bonds has already happened. Bunds have less room to rally from here. Germany is also actively issuing debt against its €500bn fiscal expansion, which adds supply pressure and caps how much bund prices can rise even if rates fall globally. These two forces, less ECB repricing left and more German supply coming to market, mean gilts should outperform bunds. Going long gilts and short bunds isolates that difference. If bonds rally everywhere, both legs move together and the broader market move offsets. What you are left with is the relative advantage of holding UK gilts over German bunds.
The US–Iran Deal pulls UK rate cut expectations forward. Gilts should outperform bunds as less ECB repricing remains and German supply pressure caps the European leg, while the UK energy channel drives a sharper inflation move.
Key RisksHIGH Deal collapses in the 60-day window. Oil reverses, the Bank of England holds, and the thesis unwinds.
HIGH UK services inflation stays sticky. The Bank of England stays cautious regardless of what happens with energy prices.
MED German fiscal supply pressure eases. Bunds rally alongside gilts and the spread between them compresses.
GTGBP10Y·UK 10Y Gilt vs German 10Y Bund
17 Jun 2026Hold Expected
Bank of England Rate Prediction
The Data
Recent UK inflation data points to a Bank of England hold rather than an immediate rate cut. CPI stayed at 2.8%, below expectations, while CPIH remained at 3.0% and core inflation eased slightly to 2.6%. That suggests price pressures are cooling, but not disappearing entirely.
The Case for a Hold
The main reason I would still expect the Bank to hold is that services inflation remains sticky at 3.7%. That matters because it shows underlying inflation is still present even as the headline rate improves. At the same time, the labour market is softening, with unemployment around 5.0% and pay growth slowing to 3.4%, which points to weaker demand and less inflationary pressure ahead.
The Outlook
Overall, this feels like a mildly dovish setup. Inflation is lower than expected, the labour market is cooling, and the balance of risks is gradually shifting toward cuts later in the year. If markets begin pricing that in more aggressively, bond yields could fall and bond prices could rise.
Mixed inflation data and a weakening labour market set up a rate hold, with potential cuts later in the year which could push bond prices higher.
SONIA·Bank of England Rate Decision · 18 Jun 2026
11 Jun 2026Bullish
ECB's First Rate Rise Since 2025 Lifts European Banks as Gold Slides
The ECB has raised rates for the first time since 2025, and the move keeps the policy backdrop supportive for bank earnings. Higher rates tend to lift net interest income, even if funding costs and credit risk build over time. Meanwhile gold has slipped to a six-month low, which makes sense in a stronger rate environment where demand for defensive assets fades. That combination points toward rotation into rate beneficiaries and away from safe-haven exposure.
If the ECB follows through with further hikes, European banks can keep outperforming while gold stays under pressure as capital shifts away from non-yielding assets.
From Yen to Franc: The Carry Trade Migrates
What Happened with Japan and Why Japan kept interest rates near zero for roughly 30 years. With no real return on Japanese debt, investors borrowed cheap yen and put that money to work in higher yielding assets elsewhere. That was the carry trade. What changed is that inflation finally arrived in Japan, giving the Bank of Japan the justification to start raising rates and remove its cap on bond yields. Japanese government bond yields are now at levels not seen in a generation, with the 10 year at 2.77% and the 30 and 40 year both above 4%. For carry traders that changes everything. Borrowing yen is no longer free and Japanese capital now has a real reason to stay at home. Both things that made the trade work are under pressure at the same time.
Why Investors Are Now Looking for Alternatives The carry trade does not disappear just because Japan becomes more expensive. Investors still want cheap funding, so they start looking for the next best option. The trade migrates rather than dies.
Why the Swiss Franc The Swiss franc is the strongest candidate. The SNB policy rate is at 0.00% and the overnight rate is sitting at effectively negative, meaning borrowing in francs is essentially free. On top of that, the franc is deeply liquid, globally trusted, and politically stable. Not every low rate currency has that combination. It is exactly what carry traders need, and right now the Swiss franc is one of the very few currencies in the world that offers it. So the thesis is that investors begin treating CHF the way they used to treat JPY. Borrow cheap francs, sell them, convert into dollars or pounds, and deploy into higher yielding assets abroad to earn the spread.
The Knock On Effects When that borrowing and selling of CHF starts happening at scale, the first effect is that the franc weakens. All those investors converting their borrowed francs into other currencies creates consistent selling pressure on CHF in FX markets. In the short run that is actually a benefit for Switzerland. A weaker franc makes Swiss exports more competitive abroad and means the overseas earnings of large Swiss multinationals like Nestlé, Roche, and Novartis translate back into more francs when reported at home. So in the early stages of this shift, Swiss exporters see a real tailwind. There is also a broader market effect. If global investors are borrowing CHF and deploying it into US Treasuries, European bonds, and emerging market debt, that creates a new wave of demand flowing into those markets, just running through a different funding currency than before.
Risks Crowded trade unwind. Carry trades tend to feel safe and predictable for a long time, then collapse very quickly. The problem is that as more investors pile into the same trade, a large hidden short position builds up in CHF across global markets. Nobody is particularly worried while it is working. Then something happens — the SNB hints at a rate rise, inflation surprises to the upside, or a broader market selloff spooks investors into moving to safety. When that trigger hits, two things happen at once. Investors around the world want to buy francs because Switzerland is seen as a safe place to park money in a crisis. At the same time, every carry trader who borrowed francs is frantically trying to buy them back to repay their loans. Both groups are buying CHF at the same moment, which sends the franc sharply higher. To pay back what they borrowed, traders are forced to sell the foreign assets they bought, whether that is US government bonds, European stocks or emerging market debt, regardless of whether anything is actually wrong with those assets. That forced selling spreads the stress far beyond Switzerland into global markets.
Reversal hurts Swiss exporters. The early stages of this trade are good for Switzerland. A weaker franc makes Swiss goods cheaper abroad and boosts the earnings of multinationals like Nestlé, Roche, and Novartis when they convert overseas revenue back into francs. But if the trade reverses and the franc strengthens sharply, all of that goes into reverse. Swiss exports become more expensive for foreign buyers, demand falls, and the overseas earnings of those same multinationals translate back into fewer francs. This could cause Swiss equities to fall in price, and the SNB may even look at cutting rates back toward negative territory as a tool to weaken the franc again.
Oil, Gilts and the Breakdown of the June Agreement
What Happened On Monday night Iran fired missiles at three commercial vessels in the Strait of Hormuz. A Qatari LNG tanker was struck and caught fire. A Saudi supertanker was damaged. The US retaliated with strikes on Iranian air defences and Revolutionary Guard boats. This morning at NATO in Ankara, Trump said: "For me, I think it's over." The US Treasury simultaneously reimposed oil sanctions on Iran in full, removing the temporary exemption that had been granted under the June agreement, effective immediately.
What It Means for Oil Brent moved back above $78 overnight. The Strait handles 20% of global oil and gas. When it closed in March, Brent topped $120. The June deal brought it back to $70. This week has reversed a large chunk of that in 48 hours. The 60 day window technically runs to mid-August so talks could resume, but the sanctions waiver is already gone and that is harder to walk back than words.
The Gilt Trade in Reverse Higher oil means UK inflation reprices upward and Bank of England rate cut expectations go into reverse. In March, gilt yields rose harder than any G7 peer. Bunds were up 42bps, Treasuries up 48bps, gilts worse than both. That asymmetry is structural: the UK imports more energy than Germany and inflation is stickier. The directional case is now short gilts, long bunds. Too early to call it a confirmed trade, but the logic of the original piece runs exactly in reverse.
Risks MED The 60-day window is still technically live and Trump has reversed harder positions before.
MED A credible signal that the sanctions waiver is being reinstated would reverse the oil and gilt move quickly.
The US–Iran Deal and Its Effects on Markets
The News On June 15, the US and Iran signed a Deal ending the conflict that had shut the Strait of Hormuz, which is where around 20% of global oil supply passes through. Oil fell to three-month lows on the news. The deal is not final though. Iran's nuclear programme, sanctions, and Hormuz logistics all remain unresolved within a 60-day window.
Why This Hits the UK Hardest Energy carries a larger weight in the UK inflation basket than in the eurozone. UK households spend proportionally more on gas and electricity, so oil price moves show up more sharply in UK data. Falling headline inflation gives the Bank of England justification to cut rates faster than currently expected, and the data now supports a move the market hasn't fully priced in yet. When rate cut expectations are brought forward, investors start buying gilts in anticipation, which pushes prices up and yields down.
The Trade Long UK 10-year gilts, short German 10-year bunds. The ECB has already been cutting more aggressively than the Bank of England this year, which means most of the dovish repricing in European bonds has already happened. Bunds have less room to rally from here. Germany is also actively issuing debt against its €500bn fiscal expansion, which adds supply pressure and caps how much bund prices can rise even if rates fall globally. These two forces, less ECB repricing left and more German supply coming to market, mean gilts should outperform bunds. Going long gilts and short bunds isolates that difference. If bonds rally everywhere, both legs move together and the broader market move offsets. What you are left with is the relative advantage of holding UK gilts over German bunds.
Key Risks HIGH Deal collapses in the 60-day window. Oil reverses, the Bank of England holds, and the thesis unwinds.
HIGH UK services inflation stays sticky. The Bank of England stays cautious regardless of what happens with energy prices.
MED German fiscal supply pressure eases. Bunds rally alongside gilts and the spread between them compresses.
Bank of England Rate Prediction
The Data Recent UK inflation data points to a Bank of England hold rather than an immediate rate cut. CPI stayed at 2.8%, below expectations, while CPIH remained at 3.0% and core inflation eased slightly to 2.6%. That suggests price pressures are cooling, but not disappearing entirely.
The Case for a Hold The main reason I would still expect the Bank to hold is that services inflation remains sticky at 3.7%. That matters because it shows underlying inflation is still present even as the headline rate improves. At the same time, the labour market is softening, with unemployment around 5.0% and pay growth slowing to 3.4%, which points to weaker demand and less inflationary pressure ahead.
The Outlook Overall, this feels like a mildly dovish setup. Inflation is lower than expected, the labour market is cooling, and the balance of risks is gradually shifting toward cuts later in the year. If markets begin pricing that in more aggressively, bond yields could fall and bond prices could rise.
ECB's First Rate Rise Since 2025 Lifts European Banks as Gold Slides
The ECB has raised rates for the first time since 2025, and the move keeps the policy backdrop supportive for bank earnings. Higher rates tend to lift net interest income, even if funding costs and credit risk build over time. Meanwhile gold has slipped to a six-month low, which makes sense in a stronger rate environment where demand for defensive assets fades. That combination points toward rotation into rate beneficiaries and away from safe-haven exposure.