The Grey Rhinos

This round of rate hiking and QT could cause a breakup of EU as the market is selecting winners and losers.

As ECB stopped QE, hikes rates, Italian and Greece Treasury rates passed 4+% and rolling over such bonds can cause a breakdown of government refinancing pushing countries to decide whether to stay in the EU.

Borrowing Yen on the cheap with low rates and carry trade it with USD can earn you good returns, but what if Yen falls too fast and Japan government decided one day to raise rates to prevent it from falling and Yen snaps back from say 145 to 135 and again to 125.

This is an imaginary situation that can happen and will cause great distress to the markets.

Beware of such grey rhinos creeping in the background, it could one day really pop.