What do you think about the ebb of the carry trade when Japan's fiscal stimulus for long-term bonds skyrockets? Today, the Japanese cabinet approved an economic stimulus plan with a scale of 21.3 trillion yen (about 135.4 billion dollars). The general account expenditure of the plan reached 17.7 trillion yen, a sharp increase of 27% compared with 13.9 trillion yen in the same period last year, making it the largest stimulus measure since the COVID-19 epidemic. Gaoshi Zaomiao stated that if tax revenue growth is not sufficient to cover all expenses, new bonds will be issued to raise funds for the stimulus plan. Due to concerns about Japan's increasing debt burden, the yield on Japan's 30-year long-term bonds has soared to 3% recently, and the US Japan exchange rate has also been rising. What the market is most concerned about is whether it will happen again due to the rise in long-term bond yields and the ebb of carry trades? Will the Bank of Japan raise interest rates in mid December? Based on recent news, the early signs of a high market do not want the Bank of Japan to raise interest rates in the near future. It can also be understood that raising interest rates on the other side, which is just beginning to stimulate the economy, is not a hedge. Of course, Ueda Kazuo may not completely follow Takashi Hayao's advice. The most direct indicator to observe the ebb of carry trades is to look at the US Japan exchange rate. You can see the trend of the US Japan exchange rate before the market crash on August 5th last year. In July of last year, the US Japan exchange rate fell from 161 to 146, and then fell again to 141 in the first week of August. It can also be understood that if the tide of carry trades really falls, there will definitely be a large amount of funds withdrawing from the US market, exchanging US dollars for Japanese yen and then withdrawing back into Japan. The process of the sharp decline in the US Japan exchange rate in July last year was the process of the withdrawal of carry trade funds, which then triggered a major shock in early August. If the carry trade goes out again in the future, it should also go through a process of such a sharp drop in the US Japan exchange rate. So by paying attention to the trend of the US Japan exchange rate, one should be able to detect whether the ebb of the carry trade is occurring