Global Game-Changer: ‘Biggest Carry Trade The World Has Ever Seen’ Unwinds

If anyone asks you what, exactly, happened to markets on Monday -- a session that'll live in infamy even as Wall Street managed to claw back some losses into the US afternoon -- just tell them that August 5, 2024, marked the culmination of an across-the-board global carry unwind. On July 25, I attempted, without a lot of success I suspect, to communicate the potential for a multi-week yen surge to create serious problems should it run too much further. The Bank of Japan was rumored to be consid

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10 thoughts on “Global Game-Changer: ‘Biggest Carry Trade The World Has Ever Seen’ Unwinds

      1. This is not trust busting. This is trying to tell businesses how to design their products and manage their services in whole new ways – essentially saying “hey, nice businesses you built. Now we want you to turn them into public utilities”.

  1. It’s hard to believe the Nasdaq was below 14k a year ago and closer to 10k less than 2 years, but I would be ecstatic if the Nasdaq dropped back to that range. I went long on bonds a couple months ago and it’s been a nice run, but I wouldn’t hesitate to rotate back to the Nasdaq 100 if it pulls back another 10%.

  2. Ben Emons, an “informed” talking head on CNBC , estimates the short interest in Japanese Yen forwards and futures had reached $4 trillion, based on IMF and CME data.

    If he is even remotely close, these carry trades will take more than three days to clear out.

    1. Not sure where I saw this, so value accordingly, but I read the total margin in Japanese equities was about USD 50BN, which seems capable of being cleared in a couple horrific days. Avg daily vol in Japan equity is like JPY 5TR or USD 33BN.

      1. The top carry trade artists are not using the money raised (in US$) to buy Japanese shares. They’re buying Mexican Peso bills etc where there is a significant yield pickup versus the borrowing costs on their yen shorts. It’s a simple interest rate arbitrage which is so much better when you can lever it up by 5 or 10 times,.

NEWSROOM crewneck & prints