All four ways people invest in the currency markets contributed to the historic weakness of the yen — and then its violent bounce back over the past month.

Why it matters: Yen traders made front-page news this week as a sharp unwind of their positions caused stock markets in Japan and globally to sink.

State of play: Currency investing broadly falls into four separate quadrants. The investors can be institutional or retail, and the type of investing can be carry or momentum.

• With the yen, all four quadrants were in play — institutional and retail investors were engaging in a trade that was both carry and momentum.

The big picture: In the U.S., investing is generally thought of, first and foremost, as investing in the stock market. That's not the case in the rest of the world.

• In Japan, households have historically saved their money in bonds rather than stocks. From there it's only a short hop to the FX markets.

How it works: Because Japan has had ultra-low interest rates for decades, individual Japanese investors started looking at dual-currency notes, where coupon payments or the principal amount would be repaid in a foreign currency. That could be the Australian or U.S. dollar, or, for even more risk and even higher yields, it could be something like the South African rand.

• Such notes are a form of carry trade — the investors' yen gets sold, and a higher-yielding currency is bought. The investors then enjoy the higher yield and hope the yen won't appreciate so much that their higher coupons get erased in FX losses.

Between the lines: Institutional investors, like U.S. hedge funds, also play the carry trade. In their case, however, they don't have Japanese yen to begin with, so they have to borrow the yen in Japan before selling it in the FX market and buying a higher-yielding currency.

• Those institutional investors normally invest in very short-term money-market instruments, so they can remain liquid and unwind the trade at will.

Catch up quick: Once individual investors got used to the idea of investing in foreign currencies, they soon started playing in the FX markets directly, rather than by buying bonds.

• The classic play in FX investing is the same for both individuals and institutions: Buy a currency that is appreciating, or sell one that is depreciating. That's a strategy known as "momentum," and it generally works.

By the numbers: Both the carry trade and the momentum trade tend to be surprisingly successful, generating equity-like returns with lower volatility.

• From early 2022 through mid-2024, they both worked wonders in Japan. The Japanese yen had super-low yields, making it the perfect funding currency for the carry trade; it was also depreciating rapidly, making it a perfect momentum trade.
• Either way, the trade involved shorting the yen and going long some other currency, normally the U.S. dollar.

Reality check: Stein's Law — that if something can't go on forever, it won't — always applies. The yen had to stop depreciating eventually, and the nature of FX markets is that such moves rarely happen slowly.

• Instead, the carry trades and momentum trades all get unwound at the same time, which means a huge wave of yen buying, and a sharp appreciation. That's what's happened over the past month, and might yet continue for a while.

The bottom line: Currency trades can be very profitable, but they're never buy-and-hold investments. Indeed, they can sometimes interfere with stock market strategies in spectacular fashion.

The strengthening of the yen over the past month has been dramatic — but the currency is still very weak by historical standards, and there's a lot of room for it to get stronger.

Real estate commissions have fallen a bit since March, after the announcement of a landmark settlement that could reshape the housing market.

Why it matters: This is just the start. In less than two weeks, new rules regarding commissions are set to take effect, and fees are expected to fall further.

Catch up quick: Right now, if you're selling a home you pay about 5% or 6% in commissions, half to the agent who helped you sell and the other half to the buyer's agent.

• Sellers list the commission rate on offer to buyer agents in an industry database, the Multiple Listing Service. Starting Aug. 17, the MLS will no longer show that rate.
• The change is part of a deal that the National Association of Realtors reached to settle a class action lawsuit filed by home sellers.

The big picture: Commission rates have been falling (slowly) for decades, as buyers have gotten savvier about asking for deals and technology has demystified home shopping.

By the numbers: The average buyer agent commission fell to 2.55%, from 2.62% at the beginning of the year, according to an analysis from Redfin of the 50 most populous metro areas in the U.S.

• Reality check: Though commission rates ticked down, the actual dollar amount buyers' agents took in over this period increased a smidgen — to $15,377 from $15,259. That's because home prices were still going up over this period.

The bottom line: Homebuyers might be able to save at the margins on commissions after the change goes into effect, but high house prices (and mortgage rates) are likely a bigger hurdle to clear.

• What to watch: It may be tricky to figure out what happens to these numbers after August; some MLS may no longer track these numbers.

There were roughly 72,000 fewer full-time real estate agents and brokers in 2023 than the year before.

Why it matters: The shrinkage comes as the volume of home sales has fallen — and now analysts expect the decline to continue after the settlement.

• The National Association of Realtors, which bills itself as the country's largest trade organization, counts about 1.5 million members.
• That number has dropped over 100,000 since 2022, one industry observer told the Washington Post.