The August Yen Bid
The book's first currency trade. Long the yen — short USD/JPY — from mid-July into late August, the window when carry trades unwind and the safe-haven bid returns. 26 of 38 winners, and 9 of the last 10.
- NDX, 1kGrowth, SPX longs (Late-May Launchpad, May 21) — through Feb 18, 2027
- CORN short (Summer Corn Short, May 28) & the Jun 4 pair — through Nov 26 / Oct 4
- GOLD long (Jun 18) — through Jan 17, 2027
- NG short (Jun 25) — through Mar 25, 2027
- SPX & NDX longs (Independence Day Launch, Jul 2) — Dec 1 / Jan 31, 2027
- SOYBEANS short (Soybean Weather Top, Jul 9) — through Aug 8
YEN long · Jul 16 → Aug 22
Twenty-eight weeks in, the book gets its first currency. The yen has a summer habit: it firms from the middle of July through late August, almost every year, and the reason is structural. The yen is the world's funding currency — traders borrow it at near-zero to buy higher-yielding assets everywhere else. That carry trade is a fair-weather structure. It leaks risk in the thin, headline-prone weeks of late summer, and when it wobbles, the reflex is to buy back yen. Layer on Japanese investors repatriating ahead of the September half-year book close, and August liquidity thin enough to exaggerate every move, and the currency catches a persistent bid into month-end.
The consistency is the story, not the size. Over 38 years the long-yen window has worked in 26 (68%), and the modern record is cleaner still: 9 of the last 10 years green, the lone miss a −5.2% in 2023. A +0.55% median looks small next to a grain or an index move — but this is spot FX. Traded at even modest leverage, or expressed through options, the move is meaningful, and the win rate is what you are really buying. This is a high-probability, small-bodied trade.
What you are actually holding is convexity. The tail is the point. Most years the yen drifts up a fraction of a percent; occasionally the carry trade doesn't wobble, it snaps — and the yen gaps. 2024 is the freshest example: +7.6% in this window as the August 5 carry unwind detonated across global markets. 1999 (+8.0%), 2007 (+5.4%) and 2016 (+5.5%) tell the same story. The losing years are shallow and ordinary; the winning tail is violent. Be honest about the one cost: long yen is negative carry — you pay the rate differential to hold it. Think of that as the premium on a cheap piece of tail insurance that, most Augusts, quietly pays for itself.
Vehicles: short USD/JPY spot, long /6J yen futures, or long FXY for an equity-account expression. Given the convex profile, USD/JPY puts (or FXY calls) are the natural fit — defined risk, and you want the gamma if the unwind hits. Size this as a diversifier, not a core position: its value to the book is that it is uncorrelated to — and a natural hedge against — the six equity and commodity longs already open.
The two weeks ahead
| Day | Notes | Trades active |
|---|---|---|
| ThuJul 9 | The Soybean Weather Top fires at the close (last week's post). | |
| MonJul 13 | Week 29 opens. BOJ and Fed both in blackout ahead of late-July meetings. | |
| ThuJul 16 | The August Yen Bid fires at the close. Long yen / short USD/JPY into the summer risk-off window. |
LONGYEN+0.55%
Exit Aug 22
|
| FriJul 17 | July equity OpEx. | |
| WedJul 29 | FOMC decision. BOJ follows Jul 31 — the window's key event risk. | |
| WedAug 5 | The 2024 carry unwind anniversary — thin-liquidity tail risk peaks early August. |
The BOJ meeting (Jul 31) is the single largest catalyst inside the hold — a hawkish surprise is precisely what accelerates the yen bid. Position into the Jul 16 close and let the meeting come to you.
Full history — 38 years
USD/JPY spot, LONG-YEN P&L (short USD/JPY), Jul 16 close → Aug 22 close. The tail years — 1999, 2007, 2016, 2024 — are where the trade earns its keep.
| Year | Yen P&L | Year | Yen P&L |
|---|---|---|---|
| 1988 | +0.5% | 2007 | +5.4% |
| 1989 | -0.7% | 2008 | -4.7% |
| 1990 | +1.6% | 2009 | -0.5% |
| 1991 | +0.5% | 2010 | +1.1% |
| 1992 | -0.2% | 2011 | +2.8% |
| 1993 | +2.9% | 2012 | +0.4% |
| 1994 | +0.7% | 2013 | +0.4% |
| 1995 | -8.8% | 2014 | -2.2% |
| 1996 | +1.0% | 2015 | +1.7% |
| 1997 | -2.3% | 2016 | +5.5% |
| 1998 | -3.2% | 2017 | +2.7% |
| 1999 | +8.0% | 2018 | +1.5% |
| 2000 | -0.3% | 2019 | +1.7% |
| 2001 | +4.0% | 2020 | +1.4% |
| 2002 | -3.5% | 2021 | +0.3% |
| 2003 | +0.5% | 2022 | +0.5% |
| 2004 | -0.4% | 2023 | -5.2% |
| 2005 | +2.0% | 2024 | +7.6% |
| 2006 | +0.6% | 2025 | +0.6% |
Read. Twelve red years in 38, but cluster them: the worst (1995, 1998, 2002, 2023) were dollar-strength regimes or aggressive BOJ easing — the same force, repeating. Against them sit the violent up-years when the carry snapped. A 68% base rate with a fat right tail and a shallow left tail is the definition of a trade you hold small and let run.