Major Central Banks Slash Rates In Sync, But One Holdout Threatens To Derail Bulls' Momentum: 'Carry Trade Is Still Unwinding'
Portfolio Pulse from Piero Cingari
Major central banks are cutting interest rates to combat slowing inflation, but the Bank of Japan is diverging by raising rates, impacting global markets. This divergence is affecting the carry trade, leading to a stronger yen and impacting U.S. tech stocks, particularly the Nasdaq 100.
September 12, 2024 | 8:20 pm
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POSITIVE IMPACT
The Invesco CurrencyShares Japanese Yen Trust (FXY) is likely to strengthen as the Bank of Japan continues to raise interest rates, diverging from other central banks.
The BOJ's decision to raise rates while other central banks cut rates is strengthening the yen, which is directly tracked by FXY.
CONFIDENCE 90
IMPORTANCE 70
RELEVANCE 80
NEGATIVE IMPACT
The Invesco QQQ Trust, Series 1 (QQQ) may face downward pressure as the yen strengthens, impacting U.S. tech stocks due to the unwinding of carry trades.
The strengthening yen is causing the unwinding of carry trades, which negatively impacts U.S. tech stocks, including those in the Nasdaq 100 tracked by QQQ.
CONFIDENCE 85
IMPORTANCE 60
RELEVANCE 70