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Carry trades refer to operations wherein an investor borrows in a currency with low interest rates, such as the Japanese yen, and reinvests the proceeds in higher-yielding assets elsewhere. "You can't unwind the biggest carry trade the world has ever seen without breaking a few heads. A change in Japanese monetary policy prompted one strategist to warn of the "implosion" of the yen carry trade over a short-term basis. watch nowEd Rogers of Rogers Investment Advisors said the yen carry trade isn't dead yet, despite the deepening stock market sell-off. "Certainly there is going to be some momentary panic, I think, about the yen carry trade.
Persons: Richard A, Brooks, Kit Juckes, Juckes, Russell Napier, Ed Rogers, Rogers, CNBC's Organizations: Tokyo Stock Exchange, Afp, Getty, Swiss, Societe Generale, U.S, Bank of Japan, Rogers Investment Advisors Locations: Tokyo, London
Stocks are experiencing a broad slump, with many market participants caught off guard by the speed of the yen's rally. The Japanese national flag is seen at the Bank of Japan (BoJ) headquarters in Tokyo on July 31, 2024. 'An implosion of the carry trade'U.S. stocks kicked off the month sharply lower, as fresh data prompted fears of a worsening economic outlook. "First of all, the hawkish Bank of Japan caused an implosion of the carry trade over a short-term basis. And all of that helps push equity markets, which had been quite expensive, even lower," he continued.
Persons: Nogi, Russell Napier, Napier, Cedric Chehab, Chehab, CNBC's Organizations: Afp, Getty, U.S ., U.S, Bank of Japan, The Bank of Japan, Federal, Dow Jones, Nasdaq, BMI, hawkish Bank of Japan Locations: Tokyo, China, Japan, U.S
Western economies rediscover meaning of scarcity
  + stars: | 2022-10-27 | by ( Edward Chancellor | ) www.reuters.com   time to read: +8 min
Western companies, which outsourced production to China and other emerging markets, found themselves less constrained by their domestic workforces. China’s rising exports lowered the prices of traded goods, dampening inflationary pressures and allowing Western central banks to cut interest rates to their lowest levels in history. In the 1970s, economists worried that fiscal deficits would lead to higher interest rates and lower investment. Western governments now face constraints that are common in developing countries, relating to fiscal policy, inflation and financial stability. To reduce the burden of their war debts, governments in Europe and the United States held interest rates below inflation.
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