How big an impact could the Yen carry-trade unwinding have? With the Yen rapidly strengthening, this subject is front and centre. As @Jefferies' Shrikant Kale's typically excellent report points out: The period since 2021 has seen a huge increase in yen denominated borrowing. August 2024's temporary unwind caused major dislocations as hedge funds de-grossed (reduced leverage). Could we see something similar happen this time? Hopefully risk managers learned their lessons, but the market's memory tends to be very short. Short term dislocations can create major buying opportunities as liquidity dries up. If one believes, as I do, that the Yen is fundamentally undervalued and should strengthen, then domestically-focused Japanese companies with input costs priced in US$ are where the best opportunities are likely to be found. Avoid large cap multinationals and exporters, where a stronger Yen hurts their translated profits and/or increases their costs relative to global competitors. Financials too may take a hit as the yen strengthening takes the pressure off the Bank of Japan and JGBs, leading to lower net interest margins for banks and lower yields on assets for insurers. Note, this is not advice, just an opinion. Do your own research.