THE WORLD'S MOST DANGEROUS TRADE IS GETTING EVEN MORE CROWDED.
Leveraged funds are now holding their largest short position in the Japanese yen since 2017. They're borrowing ultra-cheap yen to buy higher-yielding assets, particularly U.S. technology stocks, making the yen carry trade more crowded than it has been in years. The risk is what happens if the yen suddenly strengthens. A sharper yen forces investors to buy back the currency to repay their loans, triggering rapid deleveraging across global markets. We've seen this before. In August 2024, the yen surged roughly 14% against the U.S. dollar, sparking a violent unwind of carry trades. More than $6 trillion was erased from global equity markets, and panic selling reached levels not seen since the COVID crash. Today, speculative positioning is even more extreme. That doesn't guarantee another unwind—but it does mean the market is more vulnerable if the yen stages another sharp rally. Source: The Macro Paper
U.S. Dollar does it again 🚨 15-Year Trendline cannot be defeated
Source: Barchart
There is a record $8.29 trillion in money market funds right now.
Source: Koyfin
Turkey will let the Lira fall even faster against the U.S. Dollar, cautions Goldman Sachs 🚨
Apparently a 97% dump over 15 years isn't enough... Source. Barchart
USD/JPY is back at 162.7
That's the same danger zone Japan has spent months trying to escape. Since April, policymakers have thrown almost everything at the yen: • ¥11.73 trillion ($73.5B) in record FX intervention. • A BOJ rate hike to 1%, the highest since 1995. • Signals that GPIF, the world's largest pension fund, could shift more capital back into Japanese assets. Each move strengthened the yen... briefly. Each move ultimately failed. Now USD/JPY is right back where it started. This isn't just a currency story. A weaker yen makes every barrel of imported oil and every shipment of food more expensive, adding inflationary pressure while squeezing household purchasing power. Exporters may benefit, but Japanese consumers pay the price. When direct intervention, higher interest rates, and portfolio reallocation all fail to change the trend, markets are sending a clear message. Japan isn't just fighting a weak currency anymore. It's fighting the limits of its own policy tools. Source: Bull Theory
Japanese Retail Traders have now built the largest U.S. Dollar short position since the Global Financial Crisis
Source: Barchart
Argentina
Argentina's Peso has fallen to an all-time low against the U.S. Dollar and has now collapsed 99.8% since 2009 Source: Barchart
The Yen has weakened to above ¥162 to the dollar (Tradingview chart below) following a media report that local pension funds will not be pressured to purchase more domestic securities.
This is adding upward pressure on yields. Source: TradingView
