Important news has come out of Japan in recent days, which may have a significant impact on the U.S. Treasury, gold, cryptocurrency and other markets. It is necessary for us to understand what is happening.
You may have heard of Norinchukin, Japan's fifth largest bank, which recently announced it would sell off its holdings of U.S. and European bonds and repatriate the funds into yen after suffering heavy losses on those bonds.
Why is this important? Because Norinchukin was engaged in carry trade, but it did not manage the risk. Carry trade is one of the most important trades in the world. Although the Norinchukin incident is a bit extreme, it means that other Japanese banks may follow suit and sell US bonds. What exactly is the carry trade? It means that banks, shocks institutions and other institutions borrow money in Japan at zero interest, and then invest in overseas assets such as US bonds or European bonds to earn 4.5% or 5% interest. They usually hedge the exchange rate risk through forward contracts.
Back to the Norinchukin incident, if Norinchukin is not the only one, if other Japanese banks also need to close their carry trades, or if the Bank of Japan starts to change its policy, which I expect they will do soon, then the carry trade landscape will change. It will be less attractive to banks and funds, and some hedge funds have even predicted that they will start to close their carry trades, so we have to watch how things develop. Because this may lead to further selling of US bonds, which will put upward pressure on yields, which is definitely not what the Fed wants now. In addition, higher yields will also affect gold and cryptocurrencies, so I will follow this incident closely internally.
Unlike the teachers who have recently shouted about the decline in the market, we predicted the waterfall as early as the end of May and went short. Many brothers have made a lot of money just from the funding fee. A few days ago, we asked the brothers who had no layout to follow up the short orders and made a lot of money today. The most important thing is that unlike those who watch the market every day and do short-term transactions and can't sleep well, we have hardly operated from the end of May to now, and have exchanged the most stable and highest profits with the least operation.
In addition, some members of rats, who were ranked first on yesterday's gaining list, and $MTL , who were ranked first on today's gaining list, also made early arrangements on the 21st. MTL is already on the gaining list for the second time.
