Posted by Soldtoosoon on 9th of Jul 2026 at 02:13 am
Nice chart! Based on the chart, the arbitrage in interest
rate has diminished from 3.5% to less than 1%. You would
think a lot of the carry trade has unwound already.
It is fundamentally bad for US market
liquidity, and it represents the structural "breathtaking trap"
that global macro managers fear most.
The vertical spike in Japanese Government
Bond (JGB) yields isn’t just a localized problem for Tokyo—it
directly attacks the hidden plumbing that has funded the US tech
bull market and supported US Treasuries for years: the
Yen Carry
Trade.
When JGB yields go completely vertical
(the 10-year hitting a 29-year high at 2.82%+),
the cost of
funding that entire trade explodes.If the Yen begins to rapidly
appreciate or if borrowing costs in Japan spike too fast, these
multi-billion-dollar leveraged positions face massive margin
stress. To protect themselves, these desks are forced to
unwind the
trade—which means they must aggressively sell off their US
assets (Tech and Treasuries) to raise cash, pay back the Yen loans,
and repatriate the money to Japan. Gemini AI.
Japanese bond yields going verticle
Posted by holmes on 8th of Jul 2026 at 04:44 pm
not sure the ramifications of this ..... anyone?
Nothing major - just the
Posted by joss22 on 9th of Jul 2026 at 10:15 am
Nothing major - just the Government of Japan going bankrupt.
250% debt to gdp - who'd a thunk it could be a problem?
carry trade utlizes short term
Posted by Soldtoosoon on 8th of Jul 2026 at 07:01 pm
carry trade utlizes short term bonds, Bank of Japan increased the benchmark central bank rate on June 16 by .25% to 1% on June 16.
you can follow my public
Posted by matt on 8th of Jul 2026 at 07:13 pm
you can follow my public chart on that
https://www.tradingview.com/chart/mWWfJAgU/
Arbitrage
Posted by Soldtoosoon on 9th of Jul 2026 at 02:13 am
Nice chart! Based on the chart, the arbitrage in interest rate has diminished from 3.5% to less than 1%. You would think a lot of the carry trade has unwound already.
It is fundamentally bad for
Posted by EdZ on 8th of Jul 2026 at 04:52 pm
It is fundamentally bad for US market liquidity, and it represents the structural "breathtaking trap" that global macro managers fear most.
The vertical spike in Japanese Government Bond (JGB) yields isn’t just a localized problem for Tokyo—it directly attacks the hidden plumbing that has funded the US tech bull market and supported US Treasuries for years: the Yen Carry Trade.
When JGB yields go completely vertical (the 10-year hitting a 29-year high at 2.82%+), the cost of funding that entire trade explodes.If the Yen begins to rapidly appreciate or if borrowing costs in Japan spike too fast, these multi-billion-dollar leveraged positions face massive margin stress. To protect themselves, these desks are forced to unwind the trade—which means they must aggressively sell off their US assets (Tech and Treasuries) to raise cash, pay back the Yen loans, and repatriate the money to Japan. Gemini AI.
Gemini AI.
That could definitely crash our
Posted by johnny2012 on 8th of Jul 2026 at 05:00 pm
That could definitely crash our market. When, is the question.
thanks Ed. The article does
Posted by holmes on 8th of Jul 2026 at 04:54 pm
thanks Ed. The article does not give an explanation, but it does say most people don't know how bad this is