Why Could Tokyo Send Your Stocks Lower More Than the Fed?
Wall Street had its worst day since spring 2025, and the Japanese yen barely moved. That’s not good news. The biggest pile of cheap borrowed money in three decades hasn’t budged yet, and December offers two reasons why it might.
Key points
Wall Street had its worst day since April 2025, but the currency market, which usually roars loudest, stayed quiet
Cross-border yen borrowing reached $2.35 trillion, the highest level in three decades
The average investor can’t see this position anywhere in their portfolio, yet they hold exactly the assets at stake
At today’s interest-rate differential, a mere 1% currency move wipes out the return from 140 days of holding
December brings two dates, nine days apart, that could determine which way things break
The worst day since 2025, and the yen didn’t even budge
Thursday, November 5, was a day the US stock market won’t forget. The S&P 500 lost 4.4%, the Nasdaq fell 5.5% and closed in correction territory, more than 10% below its October high. The Dow Jones shed more than 1,800 points. According to CNBC, it was the worst one-day drop since April 2025, when markets were rattled by the trade war. This time, the trigger was the outcome of the US election and fears that a new majority in Congress would slow the construction of AI data centers.
By Friday morning, the wave had spread to Asia. South Korea’s Kospi opened down nearly 9%, and the exchange halted trading for 20 minutes; Japan’s Nikkei was down 7%.
And here’s the key point. The currency market, which usually roars loudest at moments like this, was almost silent. On Friday, the yen gained just 0.2% to 157.40 per dollar, then quickly gave back some of its gains, while the dollar continued to hover around 158 yen, a few percent below the 160 level defended over the summer by a joint intervention from Tokyo and Washington.
In August 2024, a similar sell-off looked completely different: the yen surged more than 10% in just a few days, and that was what sent stocks tumbling around the world. Today’s calm in the currency market doesn’t mean it’s over. It means that the huge financial leverage behind some of this year’s gains in US stocks hasn’t been unwound yet. That’s why investors with an S&P 500 ETF or Nvidia shares should keep an eye not just on the Fed, but also on the central bank based 11,000 kilometers from Wall Street.