Carry-trade blow-up haunts markets

BY now, last Monday’s global market meltdown looks more like a brief tremor, a fleeting panic unleashed by a small policy shift from the Bank of Japan (BoJ) and resurgent fears of a US recession.

But the way it unfolded so rapidly – and just as quickly faded out – is exposing how vulnerable markets are to a strategy that hedge funds exploited to bankroll hundreds of billions of dollars of bets in virtually every corner of the world.