Glossary term
Carry Trade
Borrowing in a low-yield currency to invest in a higher-yield one; the engine behind JPY-funding flows that affect tech valuations.
A Carry Trade borrows in a low-yielding currency or asset and invests the proceeds in a higher-yielding one, pocketing the spread. The classic example is borrowing in low-rate yen to buy higher-yielding assets, and the unwinding of these yen-funded positions can transmit shocks into global risk assets including tech. Carry trades are profitable until volatility spikes, when the rush to unwind amplifies market moves. See Cascade Tracker 101.