The Global Fallout from the Yen Carry Trade Unwind

The Domino Setup: How the Yen Built Wall Street’s House of Cards For decades, Wall Street hedge funds, institutional investors, and even sovereign wealth outfits have gorged on a now-endangered beast: the yen carry trade. It worked like this — borrow yen at near-zero interest rates, convert it to dollars, and dump it into higher-yielding assets: tech stocks, crypto, emerging markets, even real estate. As long as the Bank of Japan kept rates frozen and the yen stayed weak, it was an unstoppable money-printing machine. But here’s the problem: the machine is breaking. BOJ Governor Kazuo Ueda is hinting at rate hikes, and the markets are taking him seriously. Two-year Japanese yields just hit highs not seen since 2008. Suddenly,…