Japan Morphs Into the Center of Worry for Global Investors
- Sharp rise in the yen undercuts profitable carry trades
- Markets whipsaw with steepest drop in more than 30 years
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In less than a week, Japan has completely upended the world’s expectations for its markets and economy.
The country was the darling of the financial world for over a year. Its weak currency pushed the stock market to record highs and rekindled inflation after decades. Then the Bank of Japan hiked rates last Wednesday and Governor Kazuo Ueda indicated he intended to keep going, helping trigger a sharp rise in the yen and wild gyrations across the global markets. Traders and investors were forced to abandon strategies based on macro views that Japan’s currency would stay weak and interest rates wouldn’t rise too fast.