MacroVoices #445 Jim Bianco: Still No Landing, and Inflation is Not Transitory
Macro Voices
Leverage and Caution Guide Currency Trades
The yen carry trade remains attractive, driven by low borrowing costs in Japan. However, unexpected rate hikes from the Bank of Japan can cause volatility, leading leveraged traders to unwind positions to avoid currency risk. Despite the potential for further currency strengthening and market uncertainty, the trade's fundamentals persist, and a resurgence is likely if volatility stabilizes. Traders should focus on the disparity in yields, particularly in short-term U.S. and Mexican securities, rather than volatile stocks. Currency stability is key for leveraging gains in this trade.
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