Torsten Slok of Apollo Global Management has indicated that yen carry trades carry unwinding risks, pointing to significant recent fluctuations in speculative futures positions.

In a report, the Chief Economist at Apollo wrote, "Speculative futures positions have shown substantial volatility, highlighting that carry trades could be unwound rapidly, even while the broader scale of yen funding persists."

The so-called yen carry trade refers to a strategy of borrowing yen at low cost and then investing the funds into other assets. Given the intensified market volatility this year, this trading approach has been a focal point of discussion among investors. Amid speculation that Japan and the US might directly intervene to slow the yen's depreciation, the yen has appreciated approximately 1% against the US dollar so far this year.

The latest weekly Commitments of Traders (CFTC) data shows that speculative investors reduced their net short positions on the yen to 70,552 contracts, the smallest bearish position in nearly a month.

Slok noted that these fund flows contrast with the Bank for International Settlements' balance sheet data, which indicates that the scale of yen loans to offshore financial centers and non-bank borrowers remains elevated, "suggesting that the stock of yen funding positions is substantial."