Yardeni Research anticipates just a 25-basis point (bps) rate cut from the US Federal Reserve in 2024, and it believes that the yen carry trade unwind mostly taken place.

Ed Yardeni, President of Yardeni Research, said in an interview with CNBC-TV18 on Thursday; “I do not think we are going to get 50 bps, and it will be one and done for the year. It will cut in September, and I do not think there will be a cut in November and December.”

He also mentioned that much of the yen carry trade unwind appears to have already occurred.

In his discussion on the yen carry trade, he stated that it seems to have already played out. He explained that the issue arose when the yen strengthened, and the Bank of Japan (BoJ) hinted at raising interest rates. This posed a significant challenge for speculators and traders who had borrowed in Japanese yen at zero interest rates, then invested the funds in the Magnificent Seven (Apple, Microsoft, Alphabet (Google’s parent company), Amazon, Nvidia, Meta Platforms (formerly Facebook), and Tesla), or possibly in countries like Mexico and Brazil.

Also Read: Yen and Zen — why yen strength impacts Japanese equities and global economies alike

“All these things unwound very quickly, and it created a panic, and the Bank of Japan came in and stabilised things by saying that they were not going to rush to raise interest rates so that that did calm things down,” he added.

Also Read: US inflation rose 0.2% in July, clearing the way for the US Fed to begin cutting rates

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