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The Big Take

The Big Japan Short Is Back for Traders Betting Against the BOJ

The Bank of Japan says it’s committed to keeping yields low despite a global push to hike rates. As the yen gets pummeled, investors once again doubt its resolve.

The Bank of Japan headquarters in Tokyo.

The Bank of Japan headquarters in Tokyo.

Photographer: Toru Hanai/Bloomberg

In Tokyo’s financial circles, the trade is known as the widow-maker. And while it has done nothing but saddle young, cocksure investors from London to New York with crippling losses over the past two decades — ergo the name — they’re lining up once again to take a shot.

The bet is simple: that the Bank of Japan, under growing pressure to stabilize the yen as it sinks to a 24-year low, will have to abandon its 0.25% cap on benchmark bond yields and let them soar, just as they already have in the US, Canada, Europe and across much of the developing world.