Japan Could Trigger the Biggest Market Unwind in History

Watch on YouTube ↗  |  August 07, 2026 at 00:35  |  20:16  |  The David Lin Report
Speakers
Steve Hanke — Professor of Applied Economics, Johns Hopkins University
Michael Gayed — Founder, The Lead-Lag Report
Peter Schiff — CEO, SchiffGold
David Nicoski — CIO, Vermilion Research
David Lin — Founder & Host, The David Lin Report / ex-Anchor, Kitco News

Summary

The US government intervened to support the Japanese yen, but underlying fundamentals point to more yen weakness. Experts warn that a yen carry trade unwind could trigger a major selloff in US Treasuries and equities, while some argue the intervention may accelerate the unwind.

  • US bought yen using euros for the first time since 1998 to stabilize the currency.
  • Yen depreciation driven by rate differentials, fiscal deficits, energy imports, and capital outflows.
  • Steve Hanke believes fundamentals favor continued yen weakness despite intervention.
  • Michael Gaded warns that narrowing yield differentials could accelerate the carry trade unwind, causing market turmoil.
  • Peter Schiff predicts Japan will sell US Treasuries to defend the yen, leading to a crash in US bonds and stocks.
  • David Nikoski sees the joint intervention as forcing an unwind, supporting further yen appreciation.
Ideas
Steve Hanke Professor of Applied Economics, Johns Hopkins University 6:31
Yen weakening despite intervention.
The monetary cycle mismatch between the Bank of Japan and other central banks is causing a yen squeeze that reverses the carry trade. If the Fed cuts rates, the narrowing interest rate differential is yen-supportive and could accelerate the reverse carry trade, leading to further deleveraging and market instability. The unwind is difficult to contain and may cause sharp equity selloffs.
FXY MED
Michael Gayed Founder, The Lead-Lag Report 13:42
Yen carry trade unwind accelerating.
The monetary cycle mismatch between the Bank of Japan and other central banks is causing a yen squeeze that reverses the carry trade. If the Fed cuts rates, the narrowing interest rate differential is yen-supportive and could accelerate the reverse carry trade, leading to further deleveraging and market instability. The unwind is difficult to contain and may cause sharp equity selloffs.
SPY MED
Peter Schiff CEO, SchiffGold 17:25
Japan selling Treasuries crashes US markets.
Japan is the largest holder of US Treasuries. To shore up the yen, Japan will need to sell US debt and buy yen, which will cause US bond prices to fall and the stock market to crash. Even if Japan does not tighten enough, a yen crash will crash the Japanese bond market, hurting US bonds. Either scenario is bearish for US Treasuries and equities.
TLT MED
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This The David Lin Report video, published August 07, 2026, features Steve Hanke, Michael Gayed, Peter Schiff discussing FXY, SPY, TLT. 3 trade ideas extracted by AI with direction and confidence scoring.

Speakers: Steve Hanke, Michael Gayed, Peter Schiff  · Tickers: FXY, SPY, TLT