Goldman Sachs Analysts Believe Yen ‘Ideal’ Hedge Against US Recession

Source: Business Insider

The Japanese yen is an “ideal” hedge against the risk of a recession in the United States, given its weak performance against the greenback, according to analysts of Goldman Sachs. EWJ is up 0.24%, while BBJP is up 0.23%.

• Analysts led by Karen Reichgott Fishman believe that the yen is the cheapest safe-haven asset by far, given its historically cheap levels.
• The Japanese currency fell to a 20-year low in the past week, dragged by the wider gap between interest rates in the United States and Japan.
• The depreciation comes amid the decision of the Bank of Japan to keep policy rates unchanged.
• The Bank of Japan also vowed to maximize the country’s 10-year government bond yield at 0.25% while its 10-year Treasuries are yielding over 3%.
• Fishman said the latest development has “opened up significant value” for the yen, as the central bank accounts for a 35% chance of a US recession in the next 24 months.