Fed-BOJ Policy Divergence & Carry Trade Lab Macro Simulator

Source: Reuters Morning Bid | Central Bank Transmission & Sovereign Differential Engine

Scenarios:

Federal Reserve (US) HOLD 5.25%

US Consumer Spending Resilience 78 / 100

Core PCE Inflation Rate 2.80%

Fed Funds Target Rate 5.25%

US 10-Year Benchmark Yield 4.30%

Bank of Japan (BOJ) HIKE +25bps (0.50%)

Shunto Wage Growth Rate 3.90%

Japan CPI Underlying Inflation 2.50%

BOJ Policy Rate 0.50%

Japan 10-Year JGB Yield 1.05%

2Y Sovereign Yield Spread

4.10%

10Y Sovereign Yield Spread

3.25%

USD/JPY Fair Value Implied

148.20

Carry Stress Index

64.8

Unwind Vulnerability

Elevated Unwind Pressure

Institutional Flow

Repatriation to JPY

Dual Sovereign Yield Curves (US Treasury vs Japan JGB) Tenors: 3M, 2Y, 5Y, 10Y, 30Y

Carry Trade Transmission & Liquidation Corridor Elevated Unwind Pressure

Macro Transmission Mechanics (Reuters Morning Bid Analysis) Causal Policy Vector

1. US Consumer Shield

Resilient retail demand & tight labor keep core PCE at 2.80%, constraining the FOMC from near-term rate cuts.

2. BOJ Real Rate Normalization

3.90% Shunto wage settlements confirm wage-price virtuous cycle, prompting BOJ policy rate hike to 0.50%.

3. Yield Differential Compression

Nominal 10Y spread narrows to 3.25%, eroding the risk premium for holding USD assets funded in ultra-cheap JPY.

4. FX Carry Liquidation Shock

USD/JPY spot adjusts toward 148.20 fair value; leveraged cross-currency carry books face margin calls and trigger repatriation.

Populated Transmission Brief (Diagnostic Telemetry) JSON & System Export