SPX 500: Stocks look heavy US SP 500 CFDFOREXCOM:SPX500FOREXcomUS stocks are testing their session lows with major indices looking heavy amid the unwinding of carry trades... Concerns about Japan’s growing debt are intensifying. The government seems to be trying to have it both ways—implementing a massive fiscal stimulus package worth 17 trillion yen while opposing monetary policy normalization by the Bank of Japan. This conflicting stance has led to a sharp decline in the yen and bond prices, pushing Japanese yields higher. Markets now worry that the government is mishandling the economy, demanding higher returns to compensate for what they perceive as rising risk in holding Japanese debt. So why does this matter for US stocks? The turbulence in Japanese markets may be triggering a carry trade unwind, similar to what happened in the summer of 2024. In a carry trade, investors borrow funds from countries with very low interest rates—like Japan—and invest them in higher-yielding assets such as stocks, gold, or cryptocurrencies denominated in stronger currencies like the U.S. dollar. As Japanese yields climb, the cost of maintaining these trades rises. With yields now becoming uncomfortably high, traders are being forced to reduce leveraged positions across markets, including US stocks. By Fawad Razaqzada, market analyst with FOREX.com