The market is a bit schizophrenic right now—on one hand, it's betting on a Bank of Japan rate hike in December, while on the other, it's fantasizing that a new, more dovish Fed chair might be appointed. The result? Exchange rates explode first, interest rates tremble in response, and risk assets are left shivering on the sidelines.

Let's start with Japan. The central bank’s official statement was “to evaluate the pros and cons of a rate hike at the December meeting,” and combined with various news sources, it’s basically an open secret. But note: an open secret ≠ a done deal.

There’s a huge difference between the two. An open secret means the shock mainly comes from differences in expectations, not a sudden surprise. By the time the shoe actually drops, the market has already digested it.

Now, looking at the US.

Traders have recently been playing the “guess the next Fed chair” game. Reuters even used the term “shadow chair” to describe how some people are influencing expectations ahead of time. In other words: the direction of interest rates depends not just on data, but also on “who will be calling the shots in the future.”

What’s the biggest risk with this kind of trade? When expectations get pushed to the extreme and then get instantly reset by one official statement.

So what’s the conclusion? If Japan really does hike rates in December, it’ll be more like a “long-awaited repricing” rather than a repeat of last year’s liquidity stampede.

The real danger is—after everyone has priced a “sure thing” into their positions, if the central bank’s tone shifts even slightly, leverage will blow volatility through the roof.

As for the rumors that “Powell is resigning”? Treat them as noise for now—don’t let noise dictate your positions.