The 1-month (35%), 3-month (20%) and 12-month (8.6%) silver lease rates went ballistic intra-day on Thursday. These skyrocketing rates telegraph significant physical silver shortage and surging costs of holding silver short positions (5% return every 3 months for holding the physical or 5% discount for being long futures). These rates also highlight the vast sums certain market participants are paying to protect short positions. This group of shorts clearly has very deep pockets, reigniting speculation of systemic purpose.
Japan’s ruling coalition (for past 26 years) collapsed after talks between Liberal Democratic Party (LDP) chief Sanae Takaichi and junior partner Komeito leader Tetsuo Saito ended without agreement. The media suggests the impasse stemmed from disagreement over the need for LDP to regulate political donations but we would suggest Saito’s concerns arise from Takaichi hyper dovish criticism of the BOJ’s (“stupid”) decision to raise rates. Whatever the reason, the coalition collapse severely weakens Takaichi’s position even before she has officially secured the role of prime minister.
Japan’s bond yields are surging. 20-year (2.70%) and 30-year (3.17%) JGB yields highest since 1999; 40-year JGB yield (3.45%) highest since ’07 debut; and 10-year JGB yield (1.67%) highest since GFC. The 10-year forward 10-year yield is nearing 4%, more than double current rates.
The Telegraph reports investors are selling shares in publicly traded money managers on fears their $3T push into private credit may develop into a shadow-banking crisis. Shares of Apollo, Blackstone, KKR and Ares are down an average 10% in past month.
–European bonds ticking higher by 2bps-3bps across the board. 10-year Treasury yield -3.1 bps (4.107%). DXY dollar index -0.17% (up 3.2% from 9/17 low), spot gold +0.4% and spot silver +1.6% (gold/silver ratio at 79.7).
