The_dumpster_diver

Carry trade applications and future questions

TVC:JP10Y   Japan Government Bonds 10 YR Yield
Through massive easing and control of the 10 year the boj has power to control yen buying and selling. Negative yeilds mean negative returns when buying yen so it's more optimal to sell yen vs a stronger currency like usd. Ironically the usdjpy is commonly used as a risk on risk off trigger for equities. So negative carry usdjpy=yen buying hence fear. Positive carry=yen selling. When observing this keep in mind the Japanese 10 year and the psychological factor that a positive and negative yeilds play on yen. Keep in mind Asian markets are closed til next week so expect little to no change in Japan 10 year. Sales tax changes in Japan later this year may cause interesting implications for this trade. Faliure may result in steeper easing. Success may result in less easing. Prolonged easing will result in default longer term.
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