Normalisation Without Relief: The USDJPY Carry Trade in 2026
Research preview
The bond market moved first. The US 10-year is at 5.28%, the curve is +45bp, and USDJPY is running 257bp rich to its own carry. That is the setup: a rates repricing the yen has not answered. Below, the curve across four markets, the carry pair by pair, and the levels that frame the trade. The read: curve first, then carry, then the pair. On that sequence, USDJPY is 257bp off fair value. The US curve: level, slope, mechanism US 2s10s sits at +45bp — the 10-year at 5.275%, the 2-year at 4.827%....
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