Decline and fall

Bonds and fiat currencies are like Wile E. Coyote who’s just run off the cliff chasing Road Runner. Feet still peddling, looks at the camera and then plunges into the chasm.

The reason markets are slow to react is that the seriousness of the Hormuz situation is yet to fully dawn on them, despite all the US president’s propaganda that it’s going swimmingly. The media suspects that it is not but are too frightened to say it. But the reality undermining the Trump/Hegseth kick-ass narrative is gradually being exposed.

Already, Japan is feeling the crisis because she is highly dependent on energy from the Gulf. Bond yields are already in an exponential acceleration, and when (not if) the dollar/yen rate falls through 160 (scale below is inverted) Japan will have its Wile E. Coyote moment.