Possible scenario
Carry Unwind Stress
20% Chance
Higher Japanese yields make yen-funded carry trades less attractive and encourage repatriation by Japanese institutions. The main risk is not only higher sovereign yields, but forced de-risking across equities, credit and high-beta assets.
Initial impacts
- Riskier companies' borrowing costs Up
- Market volatility Up
- Bitcoin Down
- 10-year Treasury yield Down
- US dollar Up
Secondary impacts
- Technology -2.5%
Portfolio impact
S&P 500-1.8%
Each figure is the modeled move of the S&P 500 if the outcome occurs. For information only. Not investment advice.
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