Yen strength won't unravel the carry trade: JPMorgan

• JPMorgan recommends tactical SEK/JPY shorts in cash, viewing SEK (Swedish Krona) as a low-yielding currency suitable for carry trades, unlike the USD which is subject to more push/pull forces.
• The speaker asserts that the current carry trade is robust and diversified, with funding sources extending beyond the Yen to other low-yielding currencies like the Swiss Franc and various Asian currencies.
• He believes the biggest threat to the carry trade is a deflationary or disinflationary bust, potentially from a premature end to the AI cycle, rather than isolated Yen strength.

JPMorgan's Arindam Sandilya argues that recent Yen strength will not unravel global carry trades. He attributes this resilience to diversified funding sources beyond the Yen and the current pro-inflationary, hawkish monetary policy environment. A deflationary shock, rather than JPY strength, poses a greater threat to these trades.