Goldman trader Dani Wojdyla writes that he came back to Tokyo last night after a quick weekend away to see the Nikkei plunged -4% (largest drop since 9/30/24) in a brutal start to a busy week. To explain the downbeat action, he republished a note from the bank's Japan strategist Enna Hattori, which rhetorically asks "What Happened?” and which he summarizes as lack of corporate support -- yesterday was last day of buyback blackout period -- combined with quarter/fiscal year-end flows, leveraged ETFs, and CTAs flipping to sell likely exacerbated the selling pressure.
Below we republish the full note from Goldman's Enna Hattori, as the continued cracks in the carry trade, and their reverberations across global markets, are of huge importance to virtually all global risk assets.
