July-August 2024 yen carry unwind
Updated
What it is
The 2024 yen carry unwind was a global market shock triggered when the Bank of Japan raised its policy rate and the US dollar weakened on soft jobs data, causing a sharp, rapid rise in the yen. Investors who had borrowed cheap yen to fund purchases of higher-yielding assets ('carry trades') were forced to unwind those positions en masse. The deleveraging hit equities, currencies, and other risk assets worldwide within days.
Why it matters lately
The episode (BOJ hike July 31, 2024; peak selloff August 5, 2024, when Japan's Nikkei 225 fell over 12% in its worst day since 1987 and the VIX spiked toward crisis levels) remains the reference case analysts cite when assessing carry-trade and yen-liquidity risk in 2025-2026, including during the 2026 Iran-war-driven market volatility. It is a standing precedent for how a BOJ policy surprise could again trigger disorderly global deleveraging.
Asymmetric Analytics view
Inference (AA): serves as the benchmark event for modeling carry-trade unwind risk and cross-asset contagion channels elsewhere in the ELSI graph, including during 2026 geopolitical shocks.