USD/JPY → World stocks

Common explanation (Ripple · a sharp rise in the yen weighs on world stocks): Positions funded in yen are forced to unwind together, and stock markets around the world come under pressure at the same time.

This issue: USD/JPY at 94 (hot), World stocks at 72 (warm) — both above normal, in line with the common explanation.

Hot and cold describe position, not good or bad: warm does not mean a fall is coming, and an extreme reading does not mean a quick reversal. We describe history only, with no buy or sell advice.

Where it stands now

Where the two indicators stand this issue

USD/JPY: 24.3% above its 10-year average. World stocks: Positions of 20 national stock markets, weighted by market value 72.

Tests

Does this link hold up?

Common explanationPositions funded in yen are forced to unwind together, and stock markets around the world come under pressure at the same timeSource: Bank for International Settlements, “Carry off, carry on” (2024).
Tested against our dataAgreement between the positions of USD/JPY and World stocks (same month), measured in the direction of the common explanation: +0.13. Looking at every 5-year period (shifted one year at a time), the two moved in that direction in 18 of 31. Weak or inconsistent
Periods when it did not holdAcross 31 5-year periods, out of step in 1996⁠–⁠2007 and 2013⁠–⁠2025.

History

The two lines, overlaid

Data: Federal Reserve H.10, via FRED (Federal Reserve Bank of St. Louis); Positions of OECD national share price indices, weighted by World Bank market capitalization (calculated by this site). Positions: our calculation.

USD/JPYWorld stocks

Limits

What this card cannot tell you

Moving together does not prove that one causes the other.
Links change over time; periods when this one did not hold are listed in full.
This is the historical record, not a forecast.

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