I have also heard of the talk of the carry trade unwind. However, as a bond trader I can tell you that there is no way that can happen and also at the same time have 30 yr bonds rally like they are. The unwind would result in heavy sales in the 30 and 10 yr markets, and we are getting a big rally right now.
A friend of mine who is a local in the 10 year pit has confirmed this to me. As a result, we truly are not seeing this unwind right at the moment. Whether we will see it or not I have no idea, but it is not happening right now en masse. There may be some selective selling, but the buying is outweighing it presently. I think this is due to the anticipation of economic weakness ahead.
