Market Response to Geopolitical Events - The market initially reacted to Middle East tensions with a slight increase in oil prices, but this was quickly unwound, suggesting a limited market impact beyond the energy sector [1] - The market views the Middle East situation more as an inflationary impulse than a risk-off event, primarily affecting energy flows [2][3] - Events since Friday have largely been taken in stride by markets, except for the oil markets themselves [4] Central Bank Policies and Implications - The Bank of Japan's (BOJ) plans to trim its balance sheet are of significant interest, as the BOJ faces challenges with high long-term yields, inflation, and negative real yields [5] - Uncertainty surrounds the BOJ's approach to trimming its balance sheet, posing a potential risk factor for driving long-term yields higher [6][7] - The Swiss National Bank (SNB) and the Bank of Japan (BOJ) are moving in opposite directions, with the SNB in a strong position due to years of accumulating reserves [8] - The Japanese yen could face a currency crisis if the BOJ continues policies that monetize debt and depreciate the currency [10] Currency Valuation and Vulnerability - The Swiss franc is considered overvalued and tactically vulnerable, while the Japanese yen faces a potential currency crisis in the long term [10]