Global Bond Rout Made In Japan?

I. Yen-Carry Trade Unwinding?

The “yen‑carry trade” has been a key feature of global financial markets since roughly 2012. It rested on two pillars: ultra-low Japanese interest rates and either a weak or relatively stable yen. Hedge funds could borrow funds cheaply in yen, convert the proceeds to other currencies, and buy government bonds in those currencies. The beauty of this trade is that it increased downward pressure on the yen as long as the Bank of Japan (BOJ) kept its official policy rate near zero (chart).