The Yen Carry Trade Is Quietly Rebuilding

With the Fed on hold and the BoJ normalising at a glacial pace, the yield gap remains the widest in the G10. That differential is the fuel for carry, and positioning data shows it quietly rebuilding.

The danger is not the carry itself but the exit. Crowded carry trades unwind violently when volatility spikes, and USD/JPY has a history of 5-figure single-session moves on intervention or risk-off shocks.

Outlook: trend-followers stay long the differential while implied vol is suppressed, but tight risk controls are non-negotiable into any BoJ meeting.