A Vote For The Yen Carry Trade

We’ve followed Polymarket for over a year now.

There’s something about real people, betting in real-time about events that can tell you more than what the news headlines say.

These bets, which have sometimes amounted to millions of dollars, tend to send a clear signal. It’s a key reason why many members of the Grey Swan Investment Fraternity were able to forecast President Trump’s electoral college win last year.

However, Polymarket betters have finally got one bet wrong – Japan’s new Prime Minister:

Turn Your Images On

Wagers on Polymarket didn’t see Japan’s conservative party pull out its win over the weekend.
(Source: Polymarket)

The Liberal Democratic Party victory has sent Japanese stocks soaring, as party President Sanae Takaichi – now set to become Japan’s first female Prime Minister – is a proponent of stimulus spending, and a China hawk. The electoral win is a vote to keep the yen carry trade alive… and well.

The “yen carry trade” is a currency trading strategy. By borrowing Japanese yen at low interest rates and investing in higher-yielding assets, investors have profited from the interest rate differential. Yen carry trades have played a huge role in global liquidity for decades.

Frankly, we’re disappointed — not because of the carry trade but because the crowd got this one so wrong!

Time will tell how often Polymarket registers big misses. It’s still early days for the event-betting industry online. That said, we kind of liked the betting odds as a forecasting tool. No longer, eh?

~ Addison

P.S. Grey Swan Live! continues Thursday at 2 PM ET.

This week’s guest? You’re gonna love him. He’s a supply-side economist who has a decades-long track record of predicting future tech trends. We’re looking forward to picking his brain on the opportunities in AI today – and an eye on how much further the AI bubble can blow.

Who do you think it is? Send your guess to Feedback@GreySwanFraternity.com

We’ll send another hint this afternoon, with the big reveal tomorrow. But don’t wait to sign up and become a member – it just takes a few minutes.

If you have any questions for us about the market, send them our way now to: feedback@greyswanfraternity.com.

We’ve followed Polymarket for over a year now.

There’s something about real people, betting in real-time about events that can tell you more than what the news headlines say.

However, Polymarket betters have finally got one bet wrong – Japan’s new Prime Minister:

Turn Your Images On

Wagers on Polymarket didn’t see Japan’s conservative party pull out its win over the weekend.
(Source: Polymarket)

Frankly, we’re disappointed — not because of the carry trade but because the crowd got this one so wrong!

~ Addison

P.S. Grey Swan Live! continues Thursday at 2 PM ET.

Who do you think it is? Send your guess to Feedback@GreySwanFraternity.com

We’ll send another hint this afternoon, with the big reveal tomorrow. But don’t wait to sign up and become a member – it just takes a few minutes.

If you have any questions for us about the market, send them our way now to: feedback@greyswanfraternity.com.

Having said all that, why does President Trump want Greenland so badly (other than as retribution for not being awarded the Nobel Peace Prize)?

He insists it’s for national security, but, as I mentioned earlier, the U.S. military already has broad access to the island, as spelled out in the 1951 agreement signed by the U.S. and Denmark. Further, Greenland is under the protection of NATO, of which the U.S. is a member. If Russia or China tried to attack it, Article 5 of the treaty would be triggered, activating NATO forces.

Recent reporting suggests that some of Trump’s wealthiest backers see Greenland not as a military outpost or mining play, but as a blank slate. According to Reuters, influential tech investors—including Peter Thiel and Marc Andreessen—have pitched the idea of turning parts of Greenland into a so-called “freedom city,” offering a low-regulation, quasi-autonomous hub for next-gen technologies.

Japan’s 40-year yield climbed to a record 4.21%.

Japan holds $1.2 trillion in U.S. Treasurys.

When their domestic yields spike, Japanese capital returns home. That means selling U.S. assets: stocks, bonds, ETFs. That selling pressure cascaded through the global financial system.

This mechanism isn’t new.

Social spending in Europe has roughly doubled in the past 30 years. But only in 2025 has defense spending returned to levels last seen when the Berlin Wall was still standing.

Treasury Secretary Scott Bessent estimated on NBC’s Meet the Press over the weekend that the US has spent 22 trillion dollars on its commitment to NATO. Or, roughly two-thirds of the U.S.’s $38 trillion in national debt.
Social spending in Europe has roughly doubled in the past 30 years. But only in 2025 has defense spending returned to levels last seen when the Berlin Wall was still standing.

Trump boarded Air Force One this morning for the World Economic Forum in Davos, Switzerland. It’s been one year to the day since his second inauguration. At this year’s summit — already set to break attendance records with 65 heads of state and over 850 global CEOs — Greenland is top of the agenda.

“We’re going to do something on Greenland whether they like it or not,” Trump told reporters earlier this month.