HOW BIG IS THE YEN CARRY TRADE?
-$20 trillion, or 505% of Japanese GDP, using its government balance sheet, according to Deutsche bank
– $3.4 trillion (487T yen) based on Japanese investors’ net international investment
– $1 trillion using Japanese banks’ foreign lending data pic.twitter.com/Sz8tLh2w8s
— Global Markets Investor (@GlobalMktObserv) August 8, 2024
In case anyone thought (or dreamt) all was already over…👇🏻🤷🏻♂️ t.co/viZWtznKmf pic.twitter.com/vE6P4Yarr7
— JustDario 🏊♂️ (@DarioCpx) August 9, 2024
The $20 trillion figure could include leveraged positions and financial instruments like swaps, which don’t require the full amount of real money upfront. These financial strategies can significantly amplify the size of the carry trade beyond the actual capital involved.
BOJ’s Mixed Signals Leave Traders Puzzled
The Bank of Japan (BOJ) has left traders uncertain about its intentions after delivering mixed messages regarding interest rate hikes. Governor Kazuo Ueda initially signaled that the weak yen was a risk and rates might rise, causing the yen to surge and Japanese stocks to plummet. In response, Deputy Governor Shinichi Uchida later stated that rate hikes were not imminent due to market turmoil, which calmed the markets but left investors confused. The BOJ’s communication challenges have increased market volatility, with investors questioning the central bank’s consistency and clarity as it navigates the unwinding of its long-standing monetary stimulus.
Sources:
blog.bitmex.com/spirited-away/
mcalvany.com/weekly-commentary/feed/
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