{"id":28379,"date":"2026-09-04T07:30:00","date_gmt":"2026-09-04T11:30:00","guid":{"rendered":"https:\/\/jeffclarktrader.com\/market-minute\/?p=28379"},"modified":"2026-09-03T12:16:56","modified_gmt":"2026-09-03T16:16:56","slug":"the-problem-with-the-largest-trade-on-the-planet","status":"publish","type":"post","link":"https:\/\/jeffclarktrader.com\/market-minute\/the-problem-with-the-largest-trade-on-the-planet\/","title":{"rendered":"The Problem With the Largest Trade on the Planet\u2026"},"content":{"rendered":"

Watching the Japanese yen spike higher is like watching a mouse scurry across your living room floor. The first spike catches you by surprise. But it’s not that much of a concern.<\/p>\n

“It’s just one mouse,” you reason. “It’ll go away on its own.”<\/p>\n

It’s the second mouse that tells you there’s a problem.<\/p>\n

Yesterday, we saw the second mouse.  <\/p>\n

Look at this chart of the Japanese yen…<\/p>\n\n

\"\"<\/figure>\n\n

The big spike in the yen at the end of July was the first mouse. Traders shrugged it off as “no big deal.”<\/p>\n

But, we noted the potential for a problem<\/a>. A rallying yen could trigger a “risk-off” environment – where traders sell “risky” stocks and buy “lower-risk” Treasury bonds. After all, that is exactly what happened following the double-spike in the yen back in January\/February. Back then, the S&P 500 fell 7% while long-term Treasury bonds rallied 5%.<\/p>\n

Yesterday, the yen spiked higher again. We now have a higher-low and a higher-high on the chart. That is the definition of an uptrend. And, a rising yen spells trouble for the stock market as the “yen carry trade” unwinds.<\/p>\n

You see, the yen carry trade is currently the LARGEST trade on the planet. Hedge funds, family offices, and other institutional traders borrow cheap yen at low interest rates, and then invest the proceeds into everything else – like tech stocks, and all other momentum fueled assets.<\/p>\n

The trade works wonderfully when the yen declines and everything else rallies.<\/p>\n

But, when the yen rallies, the carry trade goes into reverse. Profits can turn into losses, as traders start to unwind their positions – selling off the momentum fueled assets and buying the yen.<\/p>\n

We got a glimpse of that unwinding action in July\/August of 2024 when the yen rallied 10% in about three weeks. The Nasdaq 100 (QQQ) fell 12% during that time frame.<\/p>\n

Based on the bullish look of the chart, the yen is likely headed higher in the coming days\/weeks. That will have bearish implications on risk-assets here in the U.S.<\/p>\n

Of course, it’s hard to battle the current enthusiastic environment of the stock market. We want the gains to keep coming. It’s hard to admit there’s a potential problem.<\/p>\n

But, we just saw the second mouse.<\/p>\n

Best regards and good trading,<\/p>\n

\"Signature\"<\/p>\n

Jeff Clark
\nEditor, Market Minute<\/em><\/p>\n\n","protected":false},"excerpt":{"rendered":"

A rising yen spells trouble for the stock market.<\/p>\n","protected":false},"author":2759,"featured_media":0,"comment_status":"closed","ping_status":"0","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"ep_exclude_from_search":false,"service":"","footnotes":""},"categories":[1],"tags":[],"publication":[10],"person":[7],"newsletter-type":[],"ticker":[],"class_list":["post-28379","post","type-post","status-publish","format-standard","hentry","category-market-minute","publication-market-minute","person-jeff-clark"],"acf":[],"ai_tts_audio_outdated":false,"ai_tts_content_changed_at":"","ai_tts_content_changed_during_generation":false,"ai_tts_legacy_post":false,"_links":{"self":[{"href":"https:\/\/jeffclarktrader.com\/market-minute\/wp-json\/wp\/v2\/posts\/28379","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/jeffclarktrader.com\/market-minute\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/jeffclarktrader.com\/market-minute\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/jeffclarktrader.com\/market-minute\/wp-json\/wp\/v2\/users\/2759"}],"replies":[{"embeddable":true,"href":"https:\/\/jeffclarktrader.com\/market-minute\/wp-json\/wp\/v2\/comments?post=28379"}],"version-history":[{"count":1,"href":"https:\/\/jeffclarktrader.com\/market-minute\/wp-json\/wp\/v2\/posts\/28379\/revisions"}],"predecessor-version":[{"id":28385,"href":"https:\/\/jeffclarktrader.com\/market-minute\/wp-json\/wp\/v2\/posts\/28379\/revisions\/28385"}],"wp:attachment":[{"href":"https:\/\/jeffclarktrader.com\/market-minute\/wp-json\/wp\/v2\/media?parent=28379"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/jeffclarktrader.com\/market-minute\/wp-json\/wp\/v2\/categories?post=28379"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/jeffclarktrader.com\/market-minute\/wp-json\/wp\/v2\/tags?post=28379"},{"taxonomy":"publication","embeddable":true,"href":"https:\/\/jeffclarktrader.com\/market-minute\/wp-json\/wp\/v2\/publication?post=28379"},{"taxonomy":"person","embeddable":true,"href":"https:\/\/jeffclarktrader.com\/market-minute\/wp-json\/wp\/v2\/person?post=28379"},{"taxonomy":"newsletter-type","embeddable":true,"href":"https:\/\/jeffclarktrader.com\/market-minute\/wp-json\/wp\/v2\/newsletter-type?post=28379"},{"taxonomy":"ticker","embeddable":true,"href":"https:\/\/jeffclarktrader.com\/market-minute\/wp-json\/wp\/v2\/ticker?post=28379"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}