This month's impact of the Japanese yen interest rate hike on U.S. stocks and global liquidity raises the question: can Bitcoin once again become a release valve for risk aversion sentiment?
The reversal of carry trades and capital outflows from the yen carry trade is a key transmission channel. Japan has maintained ultra-low interest rates (even negative rates) for a long time, allowing investors to borrow low-cost yen and invest in high-yield U.S. stocks, bonds, or emerging markets, amplifying liquidity in U.S. stocks. In the first half of 2024, Japanese overseas investments bought more than 67 trillion yen, with a significant portion flowing into U.S. stocks. After the interest rate hike, the yen appreciates (the USD/JPY exchange rate falls), the cost of borrowing yen increases, and investors are forced to close positions to avoid liquidation: selling U.S. stock assets and repurchasing yen. This has led to a surge in selling pressure on U.S. stocks and tightening liquidity. At the same time, the U.S.-Japan interest rate differential narrows (Japanese rates rise from 0% to 0.25%, while the Federal Reserve's rates are above 5%), weakening the dollar and further diminishing the attractiveness of U.S. stocks. Quantitative impact: analysis indicates that if the USD/JPY falls from 150 to 130, closing carry trades could trigger a 10%-20% adjustment in U.S. stocks.
