Yen Carry Trade Unwinds, Global Bond Market in Chaos

Market strategist Ed Yardeni has attributed the global bond market rout to the unwinding of the Japanese yen carry trade. The carry trade, a strategy where investors borrow in one currency at a low interest rate and invest in another with a higher rate, has been around for years.

The cheap borrowing has masked massive government deficits, but now that it's unraveling, bond yields are rising sharply. This is causing investors to reassess their positions and sell off bonds, leading to a global rout.

Yardeni sees the return of the 'bond vigilantes,' who will continue to push up interest rates until they feel comfortable with the level of government debt.