🇯🇵 Japan breaks the main cheat code of the markets
🏦 The Bank of Japan raised the rate to 0.75% — the highest in nearly 30 years.
📈 The yield on 10-year bonds is 2%, like in the mid-2000s.
⚠️ This is where the Yen Carry Trade starts to crack — a scheme that markets have lived on for two decades.
📌 What was the trick?
💴 Traders borrowed yen at 0.5%
🇺🇸 Bought assets in the USA with a yield of ≈5%
💰 The difference of ~4.5% was taken as "almost risk-free" profit
🚀 This money supported everything:
📊 Nasdaq • 🏠 real estate • 🪙 crypto
🔏 Why does the scheme break down?
📈 Japan is raising rates — protecting the yen
📉 The Fed is preparing to lower rates
📉 The interest rate spread is narrowing →
💸 cheap money disappears
🔄 Carry trade reverses:
❌ closing positions
📉 selling assets
🌊 outflow of liquidity from the USA
🔎 Result
🧩 This is a structural reversal of capital flows.
When the source of cheap money disappears —
🛑 the market is left without additional support.
