Loading ...Suggestions of more increases in the future. Prepare for a rocky landing and Tech stock troubles. Might explain Buffets move to cash.
Turmoil from the yen carry trade unwind could continue anew, according to SocGen
Analysts pointed to Japan’s central bank, which looks ready to keep raising interest rates.
A further unwinding of the yen carry trade could dent enthusiasm for US tech shares, SocGen said.
The stock market’s chaotic yen carry trade unwind that fueled the worst sell-off in two years in August may not be over, according to Societe Generale.
The European bank pointed to the likelihood that Japan’s central bank would continue to raise interest rates, a development that rocked markets in early August.
Investors panicked after the Japanese central bank issued a surprise rate hike in late July. The move sparked an unwind of the yen carry-trade, a popular strategy in which investors borrowed money at ultra-low rates in Japan to deploy in other assets, like US stocks.
The effects of that sell-off have subsided, with the major US indexes more than recovering their losses over the past month. But more turbulence could lay ahead as rates in Japan look poised to “normalize” after decades of deflation, according to SocGen global strategist Albert Edwards.
Japan’s economy is also flashing promising signs that another rate increase is in order. Wage growth in Japan just surpassed wage growth in the US for the first time in over two decades, Edwards noted,,, more
https://ca.finance.yahoo.com/news/stock-market-chaos-sparked-yen-011315026.html