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.
Photographer: Toru Hanai/BloombergIn 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.