$BTC I can't believe it! The coffin board of the world's largest carry trade currency is about to collapse!
The interest rate differential coffin board is about to be nailed down
Expectations for a rate hike in the yen to reach 90%? This means that the 'interest rate differential coffin board' that has supported countless arbitrage traders between the US and Japan is about to be nailed down by the Bank of Japan itself! Negative interest rates? That's already the shroud of a past era.
Borrow yen to buy dollars? Buying standing tickets back to Tokyo overnight
The best business of the past decade—borrowing yen at rock-bottom prices and exchanging it for dollars to buy assets worldwide. Now, with just a glare from the Bank of Japan, these arbitrageurs are scared to close their positions overnight, and the selling pressure on the dollar is like a flood, with the exchange rate breaking 7 just being the starting whistle!
Funds are flowing back, don't block the demolition team's way
As the interest rate differential narrows, international hot money is like soldiers hearing the assembly call, frantically withdrawing from dollar assets and rushing to buy yen to take home. This is not an ordinary fluctuation; it's the start of a targeted explosion of the largest carry trade structure in the world that has lasted for ten years!
But don't think this is just about the yen
1. The demolition triggers a chain explosion: The unwinding of carry trades means global dollar liquidity is tightening passively. Whichever overvalued market lacks dollars will be the first to explode for you to see.
2. A new battlefield opens: If the yen truly enters a rate hike cycle, the underlying logic of 'borrowing yen to speculate on everything' from the past decade will be completely rewritten, and asset prices will need to be re-ranked.
3. Your position may be on the volcano's mouth: If you hold assets that rely on cheap liquidity (such as certain emerging markets, tech stocks, or even cryptocurrencies), it's best to check how serious their 'yen carry dependency syndrome' is right now.
Remember this:
A change in central bank policy is not just a breeze; it's a change in the river's course. Once the flow of water changes direction, all ships' routes must be redrawn.
Thank you for reading this, and finally, I wish you good morning☀ good afternoon🥰 good night💤
