Japanese Carry Trade Status Debate on Reddit: Analysis of Claims and Market Impact

On December 1, 2025, a Reddit post [1] claimed the Japanese carry trade—borrowing yen at low rates to invest in higher-yield assets—was dead due to Japan’s spiking 2-year yield. User discussions featured polarizing views: a bearish camp warned of global economic collapse, a skeptical group argued the trade unwound in 2024 (making the news outdated), and a contrarian noted USDJPY movements suggesting the trade remained active.

External sources support the skeptical view’s basis: MarketWatch [2] reported a sudden 2024 unwinding of the yen carry trade that caused market volatility. However, Kitco [3] noted the trade revived in December 2024, indicating its cyclical nature. Internal market data [0] shows the predicted -1.75% index selloff on December 1, 2025, did not occur: the S&P 500 rose 0.13%, NASDAQ increased 0.29%, and the Dow Jones Industrial Average fell 0.24%—a modest decline far from the forecasted crash.

1. The Japanese carry trade’s status is cyclical, not permanently defunct, as evidenced by the 2024 unwind and subsequent revival [2, 3].
2. Reddit financial discussions often feature extreme, polarized views (panicked bearishness vs. unwavering bullishness) that may lack nuance compared to market data [1].
3. Predicted market crashes based on anecdotal claims are frequently unsupported by actual performance [0].

• Sudden unwinds of the carry trade, as seen in 2024, can cause global market volatility [2].
• Uninformed Reddit discussions may mislead investors with extreme claims [1].

• Monitoring yield differentials (e.g., USDJPY) can help track shifts in carry trade viability [3].
• Cross-referencing social media claims with authoritative market data reduces misinformation risk [0, 2].

The Reddit post’s claim that the Japanese carry trade is permanently dead is contested. The trade experienced a 2024 unwind but revived later that year. The predicted -1.75% index selloff on December 1, 2025, did not materialize, with major indices showing mixed but modest movement. Reddit financial discussions often feature polarized, uninformed reactions, highlighting the importance of verifying claims with authoritative data.