S&P 500 — US Large Cap Index
FTSE 100 — UK Blue Chips
Euro Stoxx 50 — Eurozone Leaders
DAX 40 — German Equities
CAC 40 — French Market Index
Nikkei 225 — Japan Benchmark
Hang Seng — Hong Kong Index
Shanghai Composite — China Mainland
ASX 200 — Australian Market
TSX Composite — Canada Index
Nifty 50 — India Large Cap
STI Index — Singapore Market
KOSPI — South Korea Index
Bovespa — Brazil Equities
JSE Top 40 — South Africa Index
IPC Index — Mexico Market
BNY’s David Tam argues that rising U.S. rate volatility should favor safe-haven currencies, with the Yen historically benefiting from such episodes. Heavy speculative JPY shorts add another catalyst, as appreciation could force position unwinds and trigger a sharper squeeze.
Heavy Yen shorts raise squeeze risk
“We argued in our recent note that rising U.S. rate vol will lead safe-haven currencies to appreciate through a mix of safe-haven and repatriation flows. Conversely, high-beta, risk-sensitive currencies could depreciate due to a shift in global risk sentiment.”
“The JPY exhibits a unique property among low-yielding funding currencies. Historical bouts of increasing rate vol tend to correlate with JPY appreciation while other funding currencies tend to depreciate.”
“By contrast, the CFTC’s Commitment of Traders (IMM) data shows near-historic levels of net short positioning of non-commercial futures positions in the CHF and JPY. The JPY has seen a steady march down since April 2025, when trend-following traders such as CTAs and other momentum traders first began unwinding their historic net longs in the wake of Liberation Day.”
“This positioning divergence could create a trading opportunity: With real money investors preparing for defensiveness and fast money investors leaning the other way, markets could be vulnerable to a sharp squeeze. For investors who expect JPY to appreciate, the positioning divergence argues for upside in both JPY and CHF. The JPY is the cleaner trade: if speculative shorts are forced to unwind, the move should be sharper.”
