US stocks closed higher today by 57 points, but Carry Trades refused to rally
Other than AUD/JPY which was led higher by the Australian dollar, all of the Yen crosses ended the day lower. We continue to stress that the relationship between carry trades and the Dow is breaking as risk aversion and high volatility limits the attractiveness of carry trades. An article in the UK Telegraph also argues that Japanese banks are not disclosing a lot of subprime losses. We suspect that many traders are just staying out of the Yen crosses.