Macro Mondays What's Going on with JPY Carry Trade?
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Dec 1, 2025 Explore Japan's intriguing inflation shift as the Bank of Japan hints at rate hikes. Discover how these changes might impact global equities and the dollar-yen carry trade. Delve into Black Friday sales data, revealing consumer resilience and the surge of AI in retail. The discussion heats up with potential escalations in Venezuela, affecting oil prices. Plus, insights on MicroStrategy's treasury strategy and the implications of proposed legislative changes on liquidity and economic policy.
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24/7 Markets Amplify Sharp Moves
- 24/7 markets spread liquidity thin and amplify moves when news hits low-liquidity hours.
- Andreas Steno Larsen says excess leverage plus round-the-clock trading explains outsized crypto crashes.
Japan's Inflation Feels Structural
- Japan shows entrenched inflation around 2.5–3% with wage pressures, signaling a structural regime shift.
- Andreas Steno Larsen argues this makes higher rates and sustained policy normalization more likely than a late-cycle blip.
Carry Trade Participation Has Shifted
- The dollar/yen carry trade is less levered now than in 2024, reducing immediate crash risk from fast deleveraging.
- If Japan yields rise, Japanese investors may prefer local bonds, creating spillovers into US Treasuries depending on curve steepness.