What Is a Carry Trade, and How Did a Small Rate Hike in Japan Just Trigger a Global Sell-Off?
Why did markets around the world drop sharply on Monday? What does it have to do with the Bank of Japan? And what is a carry trade?
It turns out those questions are all closely related. Read on for the answers.
For months, market observers have been talking about a popular trade in which investors borrowed in Japanese yen at very low interest rates, and then invested the borrowed money in high-growth investments like the "Magnificent Seven" stocks.
Source Fool.com