- Anger about the 2008 bailout makes sense. Yen carry unwind deserves attention. However, the trading call to action fails on market structure.
Key counterpoints:
- Global FX turnover runs near $9.6T per day (BIS, April 2025). A retail wave of calls will not move USD/JPY in a durable way at that scale.
- /6J options settle on /6J futures. When you buy calls, you mostly push dealer delta hedging into futures, then dealers unwind as exposure changes. No sustained spot yen demand comes from that flow.
- FXY calls track an ETF wrapper, not spot.
- “Widowmaker trade” most often refers to repeated losses from shorting Japanese government bonds, not a long-yen crowd squeeze.
- What a lot of people seem to not understand about the stock market, is that at it's basis it's just a supply/demand ratio. When it goes down it means someone is selling a lot, someone is cashing in, at least converting it into cash.
For me it was obvious something was afoot with earnings and performance not matching the prices, I finally understand why now thanks to this article.
The fact that there are rules for institutional investors and retail investors and us in retail have so little visibility and time to keep up, just shows more and more the game is a david vs a goliath, and we are all slingless david.
by sharifhsn
6 subcomments
- Speaking as a quant that has followed this story closely for months (and was educated about the yen carry trade in my degree), this narrative is somewhat wrong and also very obviously LLM slop.
It is true that the yen carry trade is currently being unwound and that it has significant implications for nearly all holders of treasuries. But claiming that ALL of the recent volatility is due to this one event is ludicrous. There are some blatant falsities, like saying that gold and silver are historically uncorrelated??? And it’s clear that the author has a bias against the financial establishment (“monopoly money”), coloring the output.
That said, there are legitimately interesting bits here I didn’t know about, like the Japanese institutional liquidation of US treasuries. I would not repeat this information to others without fact checking it, but if accurately described it’s an important space to watch. It’s not surprising that the LLM would get some things right, of course.
One big problem with this article is the clear prompt given to connect x current event to the yen carry trade, like Warsh’s nomination and the Greenland nonsense. This creates a lot of noise. It’s basically the LLM looking for a pattern between these things instead of identifying a structural flow. It might not even be wrong, but it’s horribly biased towards finding a fake pattern, so I would never trust it.
For the tech heads in HN that are excited to see a Justine Tunney post: don’t go crazy. If you’re really interested in learning about the unwinding of the yen carry trade, there’s plenty of information from actual experts to read about, not this slop.
- This is a good analysis of the yen carry trade but i'd argue the causality is backwards. Record high margin debt in the U.S. is the root cause as it's a powder keg. The yen is just the fuse being lit. When system-wide leverage is this extreme, any funding sock (whether it's the BOJ rate hikes, hawish fed, or geopolitical event) can initiate the liquidation cascade. The yen carry trade is one source of that leverage but the fragility was baked in. If Japan didn't do anything something else would have cause the liquidation cascade, only a matter of time.
The real story isn't Tokyo, it's that Wall Street built a house of cards and ran out of steady hands.
I have a public ThetaEdge card that monitors margin debt and calculates the correlation with the S&P here:
https://thetaedge.ai/public/thetix-card/42d9c6de-218d-4627-a...
- I watched this video yesterday corroborating this story and I gotta say the evidence is pretty hard to refute:
https://www.youtube.com/watch?v=7ws8Grsc4jU
Purposefully devaluing the dollar to make US goods more globally marketable and hide the Japanese debt crisis is an interesting but risky strategy.
Currently, I'm glad to see a correction without panic, but it's too early to make a call on the effect on the overall global economy. Xi's already suggested making the Yuan a global reserve currency, and seeing as much debt they're holding, I'm a little worried they're able to make it happen if this is the US financial strategy.
by drewbailey
4 subcomments
- > We saw silver drop 40% which hasn't happened since 1980
40% pullback but still up 150% over the past year..
- This is such a weird use of the domain, and kind of sad. I know the original movement was very diverse and had different ideas, but I'm not sure dispensing what ultimately amounts to financial advice from within the system really fits.
- I don't understand one thing: why would the Japanese government maintain a ZIRP or a NIRP ? What do they have to gain by doing so?
by knuckleheads
7 subcomments
- It is a shame that jart got control of @OccupyWallSt and occupywallst.com and never gave it up. It seems like her politics and views are very out of line with many of the people who were originally involved in that movement. Repurposing occupywallst.com for something like this compared to it's origin is a big disappointing contrast. https://web.archive.org/web/20111021162924/http://www.occupy...
- Whenever a government offers loans at an interest rate which is below the risk premium, that difference essentially represents the government giving the borrower free money paid for by all citizens through loss of buying power.
So when Japan offered 0% interest loans to traders who used it to buy USD bonds, it represents the Japan government offloading the cost of the risk premium to its citizens and giving the difference to the traders for free... But then the traders give that free money to the US government where it helps to inflate the USD currency supply to make American asset-holders richer.
The traders aren't actually profiting from the carry trade because the 4% return on US bonds doesn't cover the real inflation (loss of buying power) of the US dollar; their net worth in terms of buying power is actually the same or dropping. US asset holders are the ones actually reaping the benefit.
by thegrim000
0 subcomment
- Utter rubbish from an extremely biased source. Every time they say something like "didn't you notice X" or "your portfolio must look like Y" the answer is nope, you're completely wrong. Every time they talk about some major "crash" you can just go look at it and see that it recovered within 48 hours and looked identical to dozens of other events through recent history. The outright calls for violence + intentionally destroying our own economy to "stick it to the man" at the end surely make me believe this is some rational analysis.
by aeneas_ory
1 subcomments
- It‘s really hard to read this article, it smells of LLM generated slop once you get past the first couple of paragraphs - lots of negative parallelisms and lots of words without adding value to the sentence:
> To validate the thesis that the Yen unwind is the primary driver of volatility, we must examine the sequence of events. The crash did not happen in a vacuum; it followed a precise timeline …
> It wasn't just about rates anymore; it was about the stability of the U.S.-led global order
> The unwinding of a carry trade is not a monolithic event; it is a cascade that ripples outward
It‘s like almost in every paragraph. I don’t understand why this gets to be on the frontpage to be honest. It just reads horrible even if some of the points may be true (or hallucinated, who knows)
by MaxfordAndSons
1 subcomments
- Can anyone recommend a good source to ramp up one's understanding of macroeconomics/monetary policy to a point where they can make sense of this? Starting from more or less a layman's understanding. Could be a book or course, but doesn't have to be university quality, a good blog or youtube channel could do.
by IncreasePosts
0 subcomment
- Anyone doing any attempt at market analysis should lay out the trades they've made and the time frames they're talking about. So we can come back later and point a finger at them and laugh.
It seems like their conclusion is "hold lots of yen"? We'll see I guess.
by meindnoch
1 subcomments
- Sir, just tell me what do I do to make money! Do I buy? Do I sell? And what?
- Japan is interesting because it has the highest debt-to-GDP ratio of any developed country and most other countries in the world are increasing their debt-to-GDP ratio; in effect, they're all moving towards a Japanese reality due to the fiat system's lack of hard monetary constraints.
If you look at Japan, the aspects of its economy and society which stand out the most are:
- Rigid economic structure and processes.
- Economy dominated by huge corporations, without much room for startups.
- Highly concentrated urban population.
- Population decline. Many young people are not dating and not getting married, can't afford much on their salaries working in the city.
by helios_invictus
2 subcomments
- I've skimmed this article, but what does this mean for most of the people in the US?
- Only through the first two paragraphs but a little turned off by the "everybody else is wrong, we are right and it's this one specific thing" attitude when it the topic is understanding something as complex and opaque as the global economy
by QuiCasseRien
0 subcomment
- Seriously, I really appreciate that article, explaining a lot a thing we see that news are able to understand and explain.
God job
by ReptileMan
1 subcomments
- >Following the Martin Luther King Jr. holiday, U.S. markets opened on January 20 to a bloodbath. The S&P 500 fell 2.1%, the Nasdaq composite dropped 2.4%,
Should someone that calls 2.4 percent movement bloodbath be taken seriously?
- Nothing that cant be fixed with threats to invade okinawa or 100% tarriffs to matcha or sth
- >By anchoring borrowing costs at or near zero, the BOJ enabled Wall Street to borrow Yen cheaply and invest it with leverage into higher yielding instruments globally, such as U.S. treasuries, equities, and cryptography
Think you mean crypto currency here?
by thrownawaysz
0 subcomment
- Sounds good, too bad I only have $5k available. Even if I spend all on FXY it won't gain that much from the current $58.6 in the forseeable future. Rich get richer I guess so nothing changes just the location.
- > then you buy treasury bonds that pay 4%
> used by a generation of investors
How short is a generation for investors? Aren't we near 20 year highs as far as US bond rates?
I guess the point is that this is more about the Yen than about US bonds?
- A lot of the financial jargon makes the article hard to follow. I know I'm not the target audience, but I wish at times there were some plain English summaries of terms.
- Either way, we all know a crash is due before the next decade (everyone is IPOing to the exit), and if you don't realize that by now, well...
- Great piece, I like the VIX part the best. Do you need any help with your site?
- Smacks of:
"support my thesis and ignore alternative explanations and contrary evidence on whether there's even a there, there" AI-research slop.
by joshuamcginnis
1 subcomments
- > In short, occupywallst.org is a living archive and occasional update point for a landmark left-wing protest movement that put economic inequality and corporate power at the center of national conversation starting in 2011.
Is this true?
- Seems like a pretty fragile analysis
by mekdoonggi
1 subcomments
- Bottom line is: buy Yen futures to screw billionaires. Sounds pretty good to me.
by OGEnthusiast
1 subcomments
- This reads like LLM slop. The "carry trade blowing up" has been written about hundreds of time before, so it's not surprising it's so prevalent in LLM training data.
- HN is full of tech savvy people. Yet an llm slop article is upvoted to the front page of HN...
Imagine how deceptive llm slop contents are to the general population.
by anonymous908213
1 subcomments
- [flagged]
Hacker News