Malaysia, Mexico most at risk from Japan carry unwind, HSBC says

HSBC Holdings warns that bond markets in Malaysia and Mexico are highly vulnerable to capital repatriation if Japanese yields rise further. An analysis indicates that these countries, along with Chile, are disproportionately exposed to potential sell-offs of Japanese Government Bonds (JGBs). The strategists noted that while a carry trade unwind poses significant risk, the likelihood of it occurring soon is low. The recent surge in JGB yields has raised concerns about global bond valuations and market volatility, especially ahead of Japan's upcoming election.