While a hawkish Bank of Japan (BOJ) and concern around slowing US growth helped trigger strong demand for the yen on Aug 5, investors may be ignoring a deeper root of the global tumble on stocks, currencies and bonds, Husain wrote in a report.
Arif Husain says he was early in sounding the alarm on Japan’s rising interest rates last year, which he described as the “San Andreas fault of finance”.
The head of fixed income at T. Rowe Price is now warning that investors have “just seen the first shift in that fault, and there is more” market volatility ahead after the nation’s rate hike in July helped trigger a sharp reversal of the yen carry trade.
