[The surge in the yen puts the market's focus on the unwinding of arbitrage trades, and the global stock market rally faces a test] On September 11, the surge in the yen put the arbitrage trade in the spotlight again, causing the market to question whether a larger unwinding of positions would weaken the gains in global stock markets. Investors have long taken advantage of Japan's ultra-low interest rates to borrow yen at low cost and put money into higher-yielding assets such as U.S. stocks or emerging market assets. This trade works when the yen remains weak, but a sharp rise in the yen would increase the cost of repaying loans and could force investors to sell off other positions. That risk is intensifying as the yen has surged about 3% against the dollar this month to its highest level since February on expectations of faster rate hikes by the Bank of Japan and pressure from U.S. Treasury Secretary Bessent for a stronger yen. The rapid rise is fueling concerns that some investors are unwinding short yen positions and may be cutting back on leveraged bets in other areas. "The yen is probably the only indicator we're watching closely right now because it's a warning sign for global equities," said Andrea Gabellone, head of global equities at KBC Securities, adding that speculative positioning remained very high. "Tech stocks are most at risk, and historically cryptocurrencies have also been hit."