Yen Carry Trade Faces Unwinding Risk, Apollo Warns

Apollo Global Management chief economist Torsten Slok warned on February 3, 2026, that yen carry trades face significant unwinding risk, citing volatile shifts in speculative futures positions that could amplify market moves. Slok noted that while yen-funded carry trades remain widespread, recent sharp swings in speculative positioning suggest rapid deleveraging is possible. According to Commodity Futures Trading Commission (CFTC) data, net yen short positions held by speculators have fallen to 70,552 contracts—the lowest level in a month—indicating reduced bearish bets. However, Slok highlighted a divergence with Bank for International Settlements (BIS) data, which shows yen lending to offshore centers and non-bank borrowers remains elevated. The yen carry trade—borrowing low-yielding yen to invest in higher-return assets—has drawn renewed attention amid rising market volatility. Year-to-date through February 3, 2026, the yen has gained about 1% against the U.S. dollar, fueling speculation of potential joint intervention by Japanese and U.S. authorities to curb further depreciation.