苏36
09-18 13:00

③ Carry-trade unwinds hit global markets

The BOJ’s 25bp hike to 1.25% was largely expected, so the headline move is less important than what comes next. The real risk is a faster unwind of the yen carry trade.

For years, investors could borrow cheaply in yen and deploy that capital into U.S. stocks, bonds and other higher-yielding assets. If Japanese rates keep rising while the yen strengthens, the equation changes: funding costs increase, while existing positions can also suffer FX losses.

That creates a potential deleveraging loop. Investors may sell risk assets not because their fundamentals suddenly deteriorate, but simply because leverage becomes more expensive.

So I’m watching USD/JPY, Japanese bond yields and BOJ guidance closely. If the yen strengthens rapidly, the BOJ story could quickly become a global liquidity story.

The key risk is not the 1.25% rate itself — it’s the speed of the unwind.

@Tiger_comments [你懂的]

Japan Hikes Rates: Is the Cheap-Yen Era Ending?

@Tiger_comments：
The Bank of Japan has raised its policy rate by 25 basis points to 1.25%, the highest level in 31 years. The move passed by a 7-2 vote and was broadly expected by markets. The bigger question now is not the 1.25% level itself, but how far the BOJ is prepared to go from here. This matters far beyond Japan. For years, the yen has been one of the world’s cheapest funding currencies. Investors could borrow at very low Japanese rates and move that capital into higher-yielding assets elsewhere — U.S. stocks, bonds, emerging-market currencies and other risk assets. That is the basic logic behind the yen carry trade. As Japanese rates rise, that trade becomes less attractive. If the yen also strengthens, investors face both higher funding costs and FX losses. That is why every BOJ tightening cycle matters to global markets: the risk is not simply “Japan rates are higher,” but whether leveraged positions funded in yen begin to unwind. The interesting part is that Japan’s latest inflation data do not look extremely hot on the surface. August core CPI rose 1.7% year over year, while the BOJ-focused measure excluding fresh food and fuel rose 1.9%. But import costs remain a concern, especially with energy prices elevated and the yen still relatively weak. Japan’s August imports jumped 28% from a year earlier, while the country posted a trade deficit of about ¥1.1 trillion. So the BOJ appears to be acting before inflation pressure broadens again. The bank has signaled that it remains ready to keep raising rates if inflation risks persist. A recent Reuters poll showed economists expecting the policy rate to reach 1.75% by the second quarter of 2027, faster than previously anticipated. (Reuters) That is why the yen itself may matter more than today’s headline hike. Before the decision, USD/JPY was still around 156, even with markets already pricing a high probability of a rate increase. The next move will depend heavily on Governor Kazuo Ueda’s guidance and whether investors start bringing forward expectations for another hike. (Reuters) If the BOJ says 1.25% is still far from the end point, the market may begin to narrow the expected U.S.-Japan rate gap more aggressively. If it stays cautious, the yen may remain weak even after the hike. For global investors, the most important risk is therefore not simply: BOJ hikes → yen rises → stocks fall. The more dangerous sequence is: BOJ keeps tightening → yen strengthens quickly → carry trades unwind → leveraged global positions are forced to deleverage. That is the scenario that could spill into U.S. tech, bonds and other high-beta assets. Tiger View Tiger thinks this rate hike matters because two assumptions that supported global liquidity are becoming less reliable at the same time. The first was: U.S. rates would eventually keep moving lower. The second was: Japan would always provide near-free funding. Both assumptions are now under pressure. That does not mean the yen carry trade is about to collapse immediately. Japan’s rate is still low in absolute terms, and markets can absorb gradual normalization if the yen remains orderly. Tiger would watch three signals from here: First: does the next BOJ hike get pulled forward? Second: can USD/JPY move decisively below 150? Third: do Japanese investors begin bringing more capital back home as domestic bond yields rise? If the answer to all three starts turning yes, then this becomes more than a Japan story. It becomes a global liquidity story. Related Stocks Japan Equities: $iShares MSCI Japan ETF(EWJ)$ Watch: whether higher rates create a bigger split between banks and exporters. Japanese Banks: $Mitsubishi UFJ(MUFG)$, $Sumitomo Mitsui(SMFG)$ Watch: whether higher rates improve net interest margins. Japanese Exporters: $Toyota Motor Corp.(TOYOF)$, $Sony(SONY)$ Watch: whether a stronger yen pressures overseas earnings translation and export competitiveness. Global Growth Assets: $Invesco QQQ(QQQ)$ Watch: whether a stronger yen triggers broader deleveraging in carry-trade positions. Today’s Poll Japan just raised rates to a 31-year high. What matters most next? ① Yen strength — USD/JPY breaks below 150 ② Japanese banks keep benefiting ③ Carry-trade unwinds hit global markets ④ 1.25% is still too low to matter much For market discussion only. This is not investment advice. Markets involve risk, and investment decisions should be made carefully.
Japan Hikes Rates: Is the Cheap-Yen Era Ending?

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