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.

Every major tech shift has followed a similar pattern. As information moves faster, the money follows.

The telegraph made news global and opened up a world of investment opportunities. Radio, and then television, ignited a new wave of prosperity for investors. And the internet made communication instant, creating fortunes for those who saw what was coming.

Now standards like x402 are doing the same for AI and digital payments, potentially putting Jamie Dimon’s empire in jeopardy.

If you have Coinbase building the payment rails, Circle handling settlement and projects like Worldcoin and Particle Network solving for identity and wallets — do you really need a bank to validate transactions and keep track of who owns what?

All of these companies are helping to build a new layer of fintech infrastructure. And they’re all working toward an economy that runs continuously, without the need for corporate scaffolding.

“What if you held a bond auction and nobody showed up?” That’s the perennial question plaguing a Treasury Secretary.

Yesterday’s $16 billion auction of 20-year Treasurys didn’t go as well as Bessent would have liked.

High yield: 4.706%

Bid-to-cover: 2.41 (below the 10-auction average of 2.71)

Demand is softening at the exact moment the government needs to roll over debt at record levels.

With Japanese yields soaring, the returns on the carry trade are lower. Carry trades are likely getting unwound, pushing Japanese bond yields even higher.

The unwinding of the carry trade also helps explain why many individual stocks listed on the New York Stock Exchange have crashed by 40-50% from their recent highs. Investors are selling the target assets of the trade in order to pay back their yen-based loans before their profits get squeezed.

On November 10, Coinbase announced a new platform that lets users buy crypto tokens before they list on the exchange.

The company calls it: “a more sustainable and transparent way for projects to distribute tokens.”

In other words, we’re moving into ICO 2.0. But this time there will be more rules.