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Is a volatility expansion on tap across markets post FOMC?

Podcast 16 minutes to read
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Summary:  Markets are a bit nervous here ahead of the FOMC meeting tomorrow and the delayed key US data, with the key question afoot of whether the US treasury yields are set for a break higher, which could drive higher volatility across all other asset classes. Elsewhere, rising yields driving fresh woes for the JPY, with USD traders holding their breath trying to sort through the reaction function to different scenarios for US data. This and more on today's pod, which is hosted by Saxo Global Head of Macro Strategy John J. Hardy.


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Today’s Links

I penned the latest The FX Trader today, echoing the themes on interest rates discussed on today’s Saxo Market Call.

AI can't show you the time of day...
See the pre-amble to this post on the John J. Hardy substack for a funny experiment in trying to get an AI image generator to show a specific time (you can't do it - whether image or merely child's drawing.) 

Where is the vision for how the center holds?
Part 3 of Mike Green’s important and viral series on the cost of living crisis for the middle class in the US and what drives inequality - the falling share for labor in the US economy, partly due to China, but also the US’ financialization trend. It’s extremely important reading.

Should randos record everything going on around them?
Loved this one on a “glasshole” perhaps getting his due (Meta Glasses wearer has his Glasses broken in half by a woman on the subway.)

TMSR’s for the win?
China is testing an important nuclear technology that, if successful, could deliver far more energy in the future than standard nuclear fission tech in the future: thorium molten salt reactors. The technology is incredibly promising in theory, but faces steep real-world challenges including the corrosion from salts and the radioactivity of the reactor parts. But China is achieving new milestones recently, and there is even at least one Danish startup in the space - Copenhagen Atomics. The link has a fairly active news site and blog posts by CEO Thomas Jam Pedersen, who the Saxo Market Call interviewed way back in 2021 and Macro Voices spoke with over three episodes at the start of this year. Here is Part 1.

Don’t count Europe out just yet…
From my network of friends came a link to an intriguing poster on X on all things take-over related, discussing Europe’s under-recognized potential as sentiment could be far too pessimistic on the continent’s outlook and the opportunities there, with the outfit suggesting that Europe has “26 million SME’s, many with aging owners.”.

AI to supplant human labor in 3, 2, 1….
If you want to read something disturbing, on the risks that AI will render humanity unnecessary - at least for the intellectual labor we can offer - here’s one for you. Very much in the opposite direction of my poking fun at dumb AI in the commentary at the top of today’s post.

Chart of the Day - EURSEK

One that I have been waiting for to break lower, supported by end-of-year seasonality (SEK hedging) and as Sweden maintains a pristine national balance sheet relative to most Eurozone countries (would you believe under 35% of GDP) amidst the thematic focus on debt sustainability globally. A 10.89 break here could lead to 10.75 and maybe even 10.50 eventually.

09_12_2025_EURSEK
Source: Bloomberg

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