I searched for the last 2 days very intense why the SPX has such a worse day on Friday.
I guess I found the reason:
Everyone is talking that liquidity is pulled out of the market and investors want to get their monexy out of the market. Thats what we all can see. But I found that the reason for that does not look like its done on investors choice but more on force:
Investors have borrowed cheap money from japan. I found here also different articles that it has become popular to do so in the last few months.
Now Japan is thinking about to increase the interest rates about. Here I also found articles of the press:
https://www.reuters.com/world/asia-pacific/boj-expected-raise-interest-rates-june-sources-say-2026-06-04/
Then I searched deeper and found that there was already a situation in the past where it was plus minus comparable. In August 2024:
In August 2024, markets experienced a violent unwind of the JPY carry trade. Investors had borrowed cheap Japanese yen and deployed leverage into higher-yield assets—especially US equities, bonds, and risk assets. When the Bank of Japan unexpectedly tightened policy and the yen strengthened, positions were rapidly closed.
The result:
Nikkei recorded its largest collapse since 1987.
Global equities sold off.
Volatility exploded as leveraged positions were forced to unwind.
The market is again watching the yen closely—but conditions are not identical.
Unlike August 2024:
Carry positioning appears more selective.
Markets are more aware of BoJ normalization risk.
Japan’s rate cycle is now expected rather than shocking.
Today, markets are again focused on the same risk.
The difference is that tightening is no longer a surprise.
Current market expectations point to the Bank of Japan potentially raising interest rates at the June 15–16, 2026 meeting, with markets pricing a move from 0.75% toward 1.00%, depending on inflation and wage developments.
Higher Japanese rates reduce the attractiveness of borrowing yen and can trigger pressure on remaining carry positions forcing liquidiy out of the market.
August 2024 = unexpected carry unwind
Today = expected tightening with carry risk still present
To be honest I cannot tell in which direction the market will go on short term and what prices it will check. I just thought it would be good to share this informations for those who try to understand what is going on right now.
I hope that the S&P will "recover" fast from this condition and gain new strenghts.
I guess I found the reason:
Everyone is talking that liquidity is pulled out of the market and investors want to get their monexy out of the market. Thats what we all can see. But I found that the reason for that does not look like its done on investors choice but more on force:
Investors have borrowed cheap money from japan. I found here also different articles that it has become popular to do so in the last few months.
Now Japan is thinking about to increase the interest rates about. Here I also found articles of the press:
https://www.reuters.com/world/asia-pacific/boj-expected-raise-interest-rates-june-sources-say-2026-06-04/
Then I searched deeper and found that there was already a situation in the past where it was plus minus comparable. In August 2024:
In August 2024, markets experienced a violent unwind of the JPY carry trade. Investors had borrowed cheap Japanese yen and deployed leverage into higher-yield assets—especially US equities, bonds, and risk assets. When the Bank of Japan unexpectedly tightened policy and the yen strengthened, positions were rapidly closed.
The result:
Nikkei recorded its largest collapse since 1987.
Global equities sold off.
Volatility exploded as leveraged positions were forced to unwind.
The market is again watching the yen closely—but conditions are not identical.
Unlike August 2024:
Carry positioning appears more selective.
Markets are more aware of BoJ normalization risk.
Japan’s rate cycle is now expected rather than shocking.
Today, markets are again focused on the same risk.
The difference is that tightening is no longer a surprise.
Current market expectations point to the Bank of Japan potentially raising interest rates at the June 15–16, 2026 meeting, with markets pricing a move from 0.75% toward 1.00%, depending on inflation and wage developments.
Higher Japanese rates reduce the attractiveness of borrowing yen and can trigger pressure on remaining carry positions forcing liquidiy out of the market.
August 2024 = unexpected carry unwind
Today = expected tightening with carry risk still present
To be honest I cannot tell in which direction the market will go on short term and what prices it will check. I just thought it would be good to share this informations for those who try to understand what is going on right now.
I hope that the S&P will "recover" fast from this condition and gain new strenghts.
Aviso legal
As informações e publicações não se destinam a ser, e não constituem, conselhos ou recomendações financeiras, de investimento, comerciais ou de outro tipo fornecidos ou endossados pela TradingView. Leia mais nos Termos de Uso.
Aviso legal
As informações e publicações não se destinam a ser, e não constituem, conselhos ou recomendações financeiras, de investimento, comerciais ou de outro tipo fornecidos ou endossados pela TradingView. Leia mais nos Termos de Uso.