[jyl]

Interesting BOJ move today. +25bp on Japanese Govt Bond (JGB) yield doesn't sound like much, but US Treasury yields all moved up and Japanese yen moved up vs US dollar, pretty smartly.

Japanese investors borrow yen at pay near-zero Japanese rates, buy dollars and get rather healthy US rates, while hedging yen-dollar.

If Japanese rates go up, and yen goes up, then for the carry trade to remain equally attractive, US rates have to rise.

The carry trade is very large, but I don't know how large or small this particular effect will be. Not my area of specialty at all.