{"id":11244,"date":"2026-09-10T16:11:32","date_gmt":"2026-09-10T08:11:32","guid":{"rendered":"https:\/\/www.kpai1.cn\/?p=11244"},"modified":"2026-09-10T16:11:37","modified_gmt":"2026-09-10T08:11:37","slug":"%e5%bd%93%e5%a5%97%e5%88%a9%e4%ba%a4%e6%98%93%e8%ad%a6%e6%8a%a5%e5%93%8d%e8%b5%b7%ef%bc%9a%e6%97%a5%e5%85%83%e5%8d%87%e5%80%bc%e5%a6%82%e4%bd%95%e4%bc%a0%e5%af%bc%e8%87%b3%e7%be%8e%e8%82%a1%e4%b8%8e","status":"publish","type":"post","link":"https:\/\/www.kpai1.cn\/en\/archives\/11244","title":{"rendered":"When the carry trade alarm sounds: How the appreciation of the yen is transmitted to U.S. stocks and global currency markets"},"content":{"rendered":"

The rapid rise in the yen exchange rate since September is evolving from a single foreign exchange market event to a core variable affecting global arbitrage trades. As of September 10, the US dollar against the yen hit 152.89, a new low in nearly seven months since February. The cumulative rebound from the 40-year low of nearly 164 in late July has reached about 7%. The mainstream discussion in the market still remains on the surface logic of \"the Bank of Japan's interest rate hike expectations\", or simply benchmarking the arbitrage stampede market in 2024. In the view of the Wmax macro research team, this round of market prices is the result of the resonance of three factors: \"US-Japan policy coordination + central bank cyclical differentiation + extreme position structure\". Its evolution path and cross-asset impact are far more complex than the market's current linear judgment.<\/p>\n

<\/a>The essence of the market: Policy-driven valuation restoration, US-Japan collaboration has moved from behind the scenes to the front<\/strong><\/p>\n

The core driving force for this round of yen appreciation is not the market's spontaneous valuation restoration, but the clear coordination and promotion of the policies of the United States and Japan. Wmax tracked policy dynamics and found that two levels of policy signals together constitute the underlying support for this round of market conditions. From within Japan, the pace of monetary policy tightening is accelerating beyond expectations. The Bank of Japan plans to raise its policy interest rate from 1.0% to 1.25% at its meeting on September 17-18, which would hit the highest level in about 31 years, Kyodo News reported, citing sources. The swap rate market shows that the probability of a 25 basis point rate hike is as high as 98%, and the market has begun pricing in another rate increase before January 2027. It is worth noting that this interest rate hike is only three months away from the June rate hike, completely breaking the previous regular rhythm of every six months and marking the Bank of Japan\u2019s official entry into an accelerated tightening cycle. This is a policy inflection point that most institutions have not predicted before.<\/p>\n

\"IMG_256\"<\/p>\n

From a U.S. perspective, Finance Minister Bessant\u2019s public pressure became a key catalyst for the market. Bessant has made a rare statement in recent public events, claiming that he has \"asymmetric information\" about the direction of Japan's policy. He bluntly stated that \"I am the banker on the yen exchange rate,\" directly declaring war on market shorts. In Wmax\u2019s view, this is by no means a simple verbal deterrent, but a manifestation of U.S.-Japan policy coordination. The U.S.\u2019s core appeal is very clear: to push Japan to support the yen by raising interest rates, prevent Japan from selling U.S. debt on a large scale to intervene in the foreign exchange market, and thereby protect the stability of the U.S. domestic bond market. At the end of July, the United States and Japan jointly intervened in the foreign exchange market and jointly used FIMA tools, which has confirmed the in-depth cooperation between the two sides on exchange rate issues. The nature of this call is a continuation of policy coordination.<\/p>\n

<\/a>The truth about positions: The differentiation between institutional liquidation and retail investors bucking the trend hides self-accelerating upward momentum<\/strong><\/p>\n

The current position structure in the foreign exchange market shows extreme differentiation. This is the core reason why the short-term appreciation slope of the yen easily exceeds expectations. It is also a detail that is generally ignored by market analysis. Overseas institutions are experiencing clear arbitrage liquidation: as expectations for yen appreciation heat up, hedge funds continue to close short yen positions. The trading volume of USD\/JPY put options expiring at the end of last year in the options market has significantly exceeded call options, and trading funds are concentrated on betting that the exchange rate will fall into the 150-152 range. Trading volume in USD\/JPY call options expiring this month reached more than two-and-a-half times that of puts, CME data showed, suggesting traders are concentrating on unwinding short yen positions.<\/p>\n

In sharp contrast to the behavior of institutions is the contrarian operation of Japanese local retail investors. Japanese individual investors held an estimated net short yen position of 3.61 trillion yen (about $23.5 billion) last week, climbing further from August, still betting that the yen's gains will be unsustainable, according to data from the Japan Financial Futures Association and the Tokyo Financial Exchange. Japanese retail investors have always had the reverse trading habit of \"buying U.S. dollars as the yen rises.\" Previously, short positions reached 4.41 trillion yen in July, the highest since 2015.<\/p>\n

\"Partial<\/p>\n

Wmax judged that this position structure of \"active longs by institutions + passive shorts by retail investors\" hides a self-accelerating upward momentum: if the yen continues its upward trend and falls below the key support level, a large number of retail investors' long US dollar positions will trigger stop losses and be forced to sell US dollars and buy Japanese yen, which will instead become passive fuel to further push up the yen. This position trampling effect is the core reason why the yen\u2019s appreciation accelerated after it broke through the key mark of 155 in early September.<\/p>\n

<\/a>The real boundary of arbitrage closing: slope is more important than amplitude, and volatility is the core switch<\/strong><\/p>\n

The market is generally worried that the appreciation of the yen will trigger the unwinding of large-scale arbitrage trades, which will then impact global risk assets. However, Wmax believes that this logic cannot be simply deduced linearly. The core of the unwinding risk of Japanese yen arbitrage trading lies not in the absolute magnitude of appreciation, but in the speed of appreciation and the overall market volatility level.<\/p>\n

Looking back at the arbitrage stampede in the summer of 2024, the 13% appreciation of the yen in two months, combined with the increase in overall market volatility at that time, triggered a concentrated sell-off in the US stock technology sector. The cumulative appreciation of the yen in this round is about 7%, and many institutions have priced in the expectation of a stronger yen in advance, so the conditions for triggering systematic liquidation are not yet met. The latest research from Morgan Stanley's strategy team also confirms this judgment: the strength of the yen alone is not enough to shake the arbitrage trade between emerging markets and U.S. stocks. Global market volatility is the real \"switch.\"<\/p>\n

\"IMG_256\"<\/p>\n

Wmax further pointed out that what currently needs to be vigilant is the scenario of \u201crapid appreciation beyond expectations\u201d. If the Japanese yen, catalyzed by policies, experiences a single-day jump that exceeds consensus market expectations, the cost of Japanese yen liabilities for carry traders will rise sharply, forcing investors to sell U.S. dollar-denominated assets to withdraw funds to repay loans, thus forming a positive feedback loop of \"exchange rate appreciation \u2192 asset selling \u2192 further appreciation of the exchange rate.\" The AI \u200b\u200band technology sector currently has high valuations and crowded trading positions. Once a chain reaction is triggered, the sector's downward elasticity will be significantly greater than the broader market.<\/p>\n

<\/a>Medium-term boundary: The game between the two major central banks determines the ceiling, and the 150 mark is a policy sensitive area<\/strong><\/p>\n

Despite the sharp short-term gains, the yen's medium-term upside is not without boundaries. Wmax judges that the policy game between the two major central banks of the United States and Japan will ultimately determine the ceiling of this round of appreciation. From a Japanese perspective, there will be policy resistance near the 150 mark. The Japanese authorities do not want excessive unilateral strengthening of the yen. Excessive appreciation will impact the competitiveness of the export sector and offset the positive effects of rising inflation. As long as the Bank of Japan does not signal that it will continue to accelerate interest rate hikes, the yen will encounter resistance at the expected level near 150. However, Fitch Ratings pointed out that rising Japanese government bond yields will prompt domestic institutional investors to keep more funds domestically, and the Bank of Japan may raise interest rates faster than market expectations in 2026-2027, which will provide continued underlying support for the yen.<\/p>\n

From a U.S. perspective, the Federal Reserve\u2019s policy direction in September will form a reverse check and balance. The CME Fed Watch tool shows that the market is currently pricing in about 60% of the Fed's 25 basis point interest rate hike in September. Driven by August's non-farm payrolls exceeding expectations and oil prices exceeding $100, interest rate hike expectations have increased significantly from a week ago. If the Federal Reserve raises interest rates in September and releases a hawkish signal, the interest rate differential between the United States and Japan will expand again, thus limiting the downside of the dollar against the yen. The difference in policy pace between the two major central banks ultimately defines the yen's medium-term fluctuation range.<\/p>\n

\"Partial<\/p>\n

<\/a>Cross-asset inspiration and allocation recommendations<\/strong><\/p>\n

From the perspective of large-scale asset allocation, Wmax believes that the Japanese yen exchange rate cannot be viewed in isolation. Its impact will be gradually transmitted along the chain of \"foreign exchange \u2192 U.S. debt \u2192 U.S. stock technology\". Investors need to be wary of chain risks, but there is no need to panic excessively. For foreign exchange trading, it is not advisable to unilaterally chase the Japanese yen. The short-term gains have overdrafted some of the interest rate hike expectations. If the Bank of Japan only raises interest rates by 25 basis points in September and does not send a stronger hawkish signal, the yen is at risk of profit-taking. Core tracking indicators include: the Bank of Japan's forward guidance, the progress of stopping losses on retail positions, and the degree of hawkishness of the Federal Reserve's September resolution.<\/p>\n

For the equity market, focus on the capital flow risks of the AI \u200b\u200band technology sectors. Currently, the technology sector is crowded with positions and valuations are on the high side. If the yen appreciates faster than expected and triggers concentrated liquidation of arbitrage orders, it will be the first to cause disruption to the sector. But as long as there is no systematic rise in volatility, it is more of a short-term volatility risk rather than a trend reversal. Overall, the current market still generally regards this round of yen appreciation as a purely interest-rate hike-driven market, failing to identify the underlying logic of U.S.-Japan policy coordination, and underestimating the short-term overshoot risk brought about by the extreme position structure.<\/p>","protected":false},"excerpt":{"rendered":"

The US dollar hit 152.89 against the yen, a seven-month low. The appreciation of the yen is evolving from a single foreign exchange market event to a core variable affecting global arbitrage trades. Wmax in-depth dismantling: The Bank of Japan plans to raise interest rates to 1.25% in September, breaking the regular rhythm of half a year. Bessent\u2019s public pressure shows the coordination of U.S. and Japanese policies; the liquidation of institutional short positions and the 3.61 trillion yen net short position of Japanese retail investors form an extreme differentiation, hidden self-accelerating momentum. The risk of arbitrage liquidation depends on the appreciation slope and volatility, rather than the pure magnitude. The 150 mark is a sensitive area for mid-term policy, and the cross-asset impact will be transmitted along the \"foreign exchange \u2192 U.S. debt \u2192 U.S. stock technology\" chain.<\/p>","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"om_disable_all_campaigns":false,"_monsterinsights_skip_tracking":false,"footnotes":""},"categories":[121],"tags":[1662,1660,1663,1661,504],"class_list":["post-11244","post","type-post","status-publish","format-standard","hentry","category-financial-news","tag-1662","tag-1660","tag-1663","tag-1661","tag-504"],"aioseo_notices":[],"_links":{"self":[{"href":"https:\/\/www.kpai1.cn\/en\/wp-json\/wp\/v2\/posts\/11244","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.kpai1.cn\/en\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.kpai1.cn\/en\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.kpai1.cn\/en\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/www.kpai1.cn\/en\/wp-json\/wp\/v2\/comments?post=11244"}],"version-history":[{"count":1,"href":"https:\/\/www.kpai1.cn\/en\/wp-json\/wp\/v2\/posts\/11244\/revisions"}],"predecessor-version":[{"id":11250,"href":"https:\/\/www.kpai1.cn\/en\/wp-json\/wp\/v2\/posts\/11244\/revisions\/11250"}],"wp:attachment":[{"href":"https:\/\/www.kpai1.cn\/en\/wp-json\/wp\/v2\/media?parent=11244"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.kpai1.cn\/en\/wp-json\/wp\/v2\/categories?post=11244"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.kpai1.cn\/en\/wp-json\/wp\/v2\/tags?post=11244"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}