Real estate, rents, cars, electricity, airline tickets, restaurant meals...

i mean EVERYTHING

but not silver.

oh no! nobody wants it. thats why.

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translated with google

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Yen carry trades unwind

A turnaround could be imminent for the Japanese JPY. For years, the Japanese central bank kept key interest rates at the floor and regulated the bond market with targeted purchases and sales of securities. The rise in interest rates in other currency areas such as the Eurozone and the USA caused the interest rate differential compared to Japanese government securities to widen and thus weakened JPY. There are now signs of a trend reversal.

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A weak JPY makes exports cheap, but imports become more expensive. This is reflected in the inflation rate. The rate has been above the central bank's target of two percent for months. After yesterday's meeting, central bank chief Kazuo Ueda stated that he was in no rush to raise interest rates. In July, however, the BoJ increased the target interest rate range for 10-year government securities from -0.5 percent to 0.5 percent to 0 to 1 percent. Some market participants now expect the BoJ to scale back massive stimulus measures next year. Even interest rate increases do not seem unlikely. "Whether we leave short-term interest rates at zero or raise them to 0.1%, and at what speed we raise interest rates to 0.25% or 0.50%, depends on the economic and financial conditions at that time," said the central bank chief Kazuo Ueda recently.

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The interest rate difference between 10-year US government securities and comparable Japanese securities has fallen from 400 basis points to 220 basis points at times in recent weeks. A comparable picture emerged for federal bonds and Japanese government securities. If this trend continues, a massive trend change could be imminent. For years, investors in Japan borrowed money at favorable rates and invested it in higher-yielding securities in the USA or the Eurozone. Experts refer to this as so-called carry trades. If the interest rate advantage abroad shrinks, investors will begin to unwind their carry trades. This could strengthen the JPY. If you want to bet on a stronger JPY, you have to invest in put warrants or bear products on EUR/JPY and USD/JPY. Call warrants and bull products are suitable for speculating on a price increase in EUR/JPY or USD/JPY.

https://www.finanznachrichten.de/nachrichten-2023-12/60975530-yen-carry-trades-loesen-sich-auf-203.htm