In its simplest form, the yen carry trade has investors borrowing cheap yen to invest in higher yielding assets, often currencies. For example, because there is not a central source to track currency trades, we have no idea how big the yen carry trade is. The yen is rising, and that is making the yen carry trade less profitable. If the yen goes from 155 to 145, which is where it traded Monday, it will take $68,965 to repay that 10 million yen (10 million yen divided by 145 = $68,965). One positive sign: the ETF to watch is the Invesco Japanese Yen ETF (FXY), which tracks the price of the Japanese yen, had volume six times normal yesterday.

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Persons: That's, Nicholas Colas Organizations: Nikkei, Street Journal, Federal Reserve, Bank of Japan, U.S, U.S ., Yen ETF Locations: U.S, Japan