1. Topix vulnerability
2. Bunds: efficient way to capture European growth de-rating
3. Risk off - EURAUD vs. AUDJPY

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Posted on

August 21, 2025

Written by

Qi Analytics Team

1. Topix vulnerability

The Topix is trading +1.4 sigma above its Qi model fair value – that is approaching the upper end of its fair value gap range since 2009!

See the first chart below.

Model explanatory power is also high at 74%. The Topix is among the most sensitive of the major indices to risk aversion and CB QT expectations, i.e. rate vol. Amid elevated inflation pressures, expectations are rising that the BOJ will continue to hike interest rates and taper bond purchases.

Further, the Topix Fair Value Gap has a strong correlation to the Topix spot price. In other words, when the FVG elastic is looking too extreme we should pay attention to mean-reversion risk.