The 10-year Japanese government bond yield has reached 1.96%, just a breath away from 2%.
This number itself is not large, but the signal is significant— the last faucet of cheap global capital may really be tightening.
For so many years, leveraged trading and carry structures around the world have been built on the assumption that "Japanese interest rates will always stay low." Now, this assumption is being torn apart.
Once 2% is firmly established, the market will have to answer a bunch of questions anew: Is carry trading still profitable?
How long can the model of low-cost financing last?
How much of those lofty asset prices are supported by cheap money?
These questions won't just be discussed in the news; they will be directly reflected in prices.
I don't like using the term "black swan," but this feels more like a delayed fuse— it may not explode immediately, but once the chain reaction starts, hitting the pause button becomes very difficult.
I will take an extra look at this time window on October 19th. It's not that I can predict anything, but at times like this, I'm most afraid that the market won't take it seriously.
Recently, my strategy can be summed up in two words: contraction. Positions that can remain still should remain still, and bullets that don’t need to be fired should be saved for later.
In this environment, don't always think about "am I right or wrong in my judgment?" It’s more important to ensure that you don’t get sucked into the vortex.
Remember: those who survive are not the ones who are right every time, but those who can dodge when they need to.
