Source: Bloomberg

Gold, the Euro, US bond yields and the US stock market did a round trip in the afternoon session as markets figured out that North Korea’s latest attempt to look important had no takers. Evidently Pyongyang hoped that missiles aimed at Japan would elicit a sufficiently bellicose reaction from Tokyo to jolt Beijing out of its cooperative mood.

As Dr Stephen Bryen reports on the main page, Japan decided that doing nothing and looking weak was the better part of valor, because any attempt to look tough would run into intractable problems (for example, the minor problem of trying to shoot down incoming missiles with available American anti-missile technology).

Japan did nothing, and the markets decided that no repricing of risk was necessary.