It is necessary to pay attention to the actions of the Bank of Japan. Yesterday, there were reports that the Japanese government should have tacitly approved the Bank of Japan's mid December interest rate hike statement. Previously, it was mentioned that if the carry trade recedes, a large amount of funds will be withdrawn from the US market, converted from US dollars to Japanese yen, and then withdrawn back into Japan, causing a significant decline in the US Japan exchange rate. In the past two days, the US Japan exchange rate has continued to fall below the 155 level. It was previously discussed that if the US Japan exchange rate continues to decline, it means that there will still be funds withdrawing from the US dollar and returning to the Japanese yen. The impact this time should not be as significant as last July and August, but if the US Japan exchange rate continues to decline significantly, the impact should still be present. In addition to the trend of the US Japan exchange rate and further indicators for observing the ebb of the carry trade: 1) It is also necessary to pay attention to the change of interest margin, the difference between the yield of the 10-year treasury bond bonds of the United States and Japan. Currently 2.22% (4.10% USD -1.88% daily), if further reduced to below 2%, it will accelerate the ebb tide. 2) CFTC's short position in the Japanese yen reflects the size of speculators' short positions in the yen. The current net short position is 79.5K contracts (approximately $10 billion exposed), a decrease of 15% from early November; If the weekly reduction exceeds 20%, confirm the start of ebb tide. After the peak of 160K contracts in July 2024, there was a sharp decrease of 100K. 3) Financial pressure and leverage indicators (cross currency basis, liquidation data), negative cross currency basis (USD/JPY basis swap) indicates an increase in funding pressure on the US dollar, forcing liquidation; A liquidation scale exceeding 1 billion US dollars per day is a systemic risk. In 2024, the "unexpected+high leverage" caused a severe impact (VIX 65, position collapse of 100K). It has been previously discussed that the Bank of Japan raised interest rates more than expected and unexpectedly reduced its balance sheet. At the same time, the US non farm payroll in July 2024 fell significantly short of expectations, triggering strong recession concerns. The combination of these two factors resulted in a significant liquidity shock. Currently, it is expected to be relatively sufficient and buffered. Funds can be withdrawn in an orderly manner, but currently VIX is still at a low level. There is a possibility of risks that are controllable but have minimal impact. Of course, it also depends on the December Federal Reserve interest rate meeting. In addition to cutting interest rates, will there be any liquidity operations, such as the bond buying operations mentioned by New York Fed President William in November to enhance market liquidity? If the Fed has any, it will also hedge against the impact of the yen interest rate hike.