The latest leg higher in USD/JPY came after Waller laid out a scenario where his two choices for the June 14 FOMC meeting are to either hike or to tee up a high in July.
Now, he's a hawk so he might not represent what the Fed will do and he leaned heavily on the data so it's certainly not set in stone.
For now though, the trend is for a higher dollar and the USD/JPY chart illustrates that. it's breaking to new highs today and confirming that the March top has broken. It's come with yields rising, including 5.3 bps in 5s to 3.800%, just ahead of an auction at the top of the hour.
The market is once again re-evaluating whether the Fed has found a top and how long it can stay there once a pause is achieved. In a sense, that's good news because it means the economy is strong and resilient but at some point the Fed will push too hard and something like the bank crisis could bring about a catastrophe.
Or the catastrophe might be self-inflicted like the current debt ceiling debate. That fiasco continues to fester and the uncertainty about it isn't helping anything.
