Macro Mondays – What's Going On with JPY Carry Trade?

Podcast: Macro Mondays
Host: Andreas Steno Larsen (with co-host Mikael Rosenwald)
Episode Date: December 1, 2025

Episode Overview

This Macro Mondays episode delves into the dynamics of Japan’s monetary policy, especially regarding the Japanese Yen (JPY) carry trade, recent hints at a rate hike from the Bank of Japan (BOJ), and how this sudden policy move impacts global markets, with a specific eye on Bitcoin and broader asset classes. The hosts also branch into Black Friday retail numbers, potential geopolitical escalation in Venezuela, and answer listener questions about MicroStrategy’s reserves and recent developments in central bank liquidity. True to Macro Mondays’ style, Andreas and Mikael balance sharp macro analysis with their trademark candid, irreverent tone.

Key Discussion Points & Insights

1. Why Did Bitcoin Crash $5,000 Overnight?

Timestamps: 02:31–05:14

• Event: Bitcoin lost $5,000 in value over three hours, labeled “the demon candle.”
• Trigger: Coincided with Bank of Japan Governor Ueda signaling a rate hike for December.
• Andreas’ Analysis:
  • Major moves can happen in 24/7 markets during “thin liquidity” windows.
  • Leverage exacerbates the effect: “You run the risk of market news appearing during an hour with exceptionally low liquidity... this is something you have to accept as a feature, not a bug of a 24/7 market.” (Andreas, 03:38)
  • Other risk assets sold off, but the impact was muted compared to Bitcoin.

Notable Quote:

“Be careful with the leverage out there, kids.”
(Mikael, 05:14)

2. The Changing Narrative in Japanese Monetary Policy

Timestamps: 07:28–13:16

• Entrenched Inflation: Japanese inflation is now running 2.5–3%, driven largely by wage growth—a “dramatic regime shift” compared to Japan’s deflationary last decades.
• Historical Context: Many pundits compare 2025 to 2007–08 (last hike cycle), but Andreas argues structural conditions are different now—liquidity and price pressures have fundamentally changed.
• Equity Market Response: Nikkei and Japanese cyclicals performing well, despite rising yields and reduced BOJ asset purchases.
• Carry Trade Dynamics: Compared to 2024, levered speculators are less engaged in the dollar/yen carry trade—positioning is now “roughly flat,” lowering spillover risks.
• Key Point:
  • Japanese life/pension funds may shift allocation if the local yield curve steepens, potentially causing ripple effects into global bond markets, especially US Treasuries.

Notable Quote:

“Having brought inflation back in Japan, and now we’re seeing that entrenched inflation, I actually think that’s good… something has structurally changed.”
(Andreas, 09:39)

3. Why Did BOJ’s Rate Hike Hints Hit Crypto Hard?

Timestamps: 13:16–14:57

• Mikael presses on the disproportionate Bitcoin reaction.
• Andreas: Asian accounts reacted “more than European or US accounts,” and BOJ has tended to walk back hawkish rhetoric after prior meetings.
• The anticipated hike is likely a “one and done,” not a prolonged tightening cycle.

Notable Quote:

“It’s very early days to conclude that the tide has turned on the dollar/yen trade… I think it’s the same here: they’ll do 25 in December or January, and then wait a long time before doing anything again.”
(Andreas, 14:27)

4. Black Friday: Consumer Health Barometer?

Timestamps: 14:57–17:32

• Retail Numbers: Black Friday sales up 4.1% YoY (including inflation), online spending up 9.1%.
• Macro Implication: Suggests resilient consumer demand; “the retail sector is still doing OK.”
• Consumer spend shifting toward discount vs. luxury stores—a signal Andreas tracks closely.

Notable Quote:

“If you see a lot more discount buying, it’s not necessarily the strongest signal for the consumer... but at least the economy is not declining.”
(Andreas, 16:01)

5. AI in Retail: A Channel Revolution

Timestamps: 17:32–18:22

• Stat: AI traffic to US retail websites up 805% YoY on Black Friday.
• Andreas observes consumer AI use is accelerating, outpacing B2B use.
• Traditional SEO/marketing must adapt—AI is now first stop for many digital shoppers.

Notable Quote:

“If you’re working in old school search engine optimization, you might need to consider your line of work essentially.”
(Mikael, 18:22)

6. Geopolitical Watch: US–Venezuela Tensions

Timestamps: 18:22–21:23

• Mikael warns markets may underestimate the risk of US military action against Venezuela; recaps classic escalation steps (casus belli, labeling Maduro a terrorist).
• Defensive megatrend in European stocks (e.g., Rheinmetall) may be fading; “pit stop” in US defense names could hedge Venezuela risk.

Notable Quote:

“If you look at the face value of what Pete Hex and Donald Trump are telling you, they’re telling you they’re going to attack Venezuela… sometimes you need to take these things at face value.”
(Mikael, 20:26)

Oil Price Angle

• Andreas: Would a US strike on Venezuela push oil prices up or down?
• Mikael: Short-term up; long-term, regime change → western companies restart production = downward pressure.

7. Listener Q&A

a. MicroStrategy’s Dollar Reserve Strategy & Regulatory Shifts

Timestamps: 23:17–25:21

• MicroStrategy announced a $1.4B "dollar reserve"—concern about digital asset Treasuries precedence.
• Andreas: Points out new MSCI regulations; companies with >50% of balance sheet in digital assets may soon be classified as “investment funds”—bad for premium valuations.
• Prefers direct crypto exposure over buying “the dApps.”

Notable Quote:

“This MicroStrategy case looks slightly shaky and I would personally prefer the underlying to the dApps in the Bitcoin space...”
(Andreas, 24:56)

b. Is QE Back? The Week’s Hot Takes

Timestamps: 25:21–28:01

• Listener cites a thread predicting “Fed QE, massive liquidity, Trump Bitcoin bill” all in one week.
• Andreas: QT may be ending, maybe a “light QE” to avoid repo stress, but classic QE is highly unlikely. Regulatory changes (“eslr”) free up bank reserves, reducing need for Fed balance sheet expansion.

Notable Quote:

“QE as we knew it, forget about it. It won’t even happen next year—I’m almost certain about that.”
(Andreas, 26:50)

• Sentiment check: Crypto Twitter is a cocktail of bear/fake-news/four-year-cycle hype; macro backdrop still doesn’t show signs of an economic peak.

Notable Quote:

“We’re still waiting for that business cycle pick above 50… all asset markets are macro asset markets. You don’t see a major peak in assets unless you have a cyclical peak in the economy.”
(Andreas, 28:18)

Memorable Moments & Lighter Notes

• Mikael’s “trade ideas may be SOMETIME MAYBE GOOD, SOMETIME MAYBE SHIT” catchphrase reiteration.
• Off-hand observation that cleaning staff may be the best high-growth “data center play.”

  “The guys with the brooms, that’s the way to go!” (Mikael, 06:16–06:44)

Key Takeaways

• Policy Shift in Japan: There’s a real, regime-level pivot in Japanese monetary policy, with lasting implications for global bond flows and risk assets—this isn’t just a cyclical blip.
• Market Structure Risks: 24/7 markets and leverage can create outsized moves in off-hours—traders beware of thin liquidity and central bank surprise.
• Crypto/Sovereign Risk: Both regulatory (MSCI for digital asset companies) and macro (Fed liquidity policies, BOJ action) narratives are at critical junctures.
• Wake-Up Call for Retail: Both macro analysts and marketers must adapt to changing consumer channels—AI-driven retail is rewriting the digital playbook.
• Geopolitical Risk: Don’t sleep on US–Venezuela escalation; could affect both defense equities and (in the long run) oil prices.

If You Missed It…

• This episode provides a sharp, entertaining tour of evolving macro risks, richly layered with wit, actionable context, and peerless market perspective. If you want to understand why the JPY carry trade still matters, how central bank surprises ripple through every asset on the planet, and how quickly macro narratives can evolve—this is your go-to rundown.