Today, the BoJ will hike interest rates again, pushing government bond yields to their highest levels in history.
They’re also sitting on $10 TRILLION in debt, expanding every day.
This is a perfect recipe for global collapse:
For years, Japan survived on near-zero rates.
That life support is gone.
Now the math turns brutal.
Higher yields mean:
→ Debt servicing costs explode
→ Interest consumes government revenue
→ Fiscal flexibility disappears
No modern economy escapes this smoothly:
→ Default
→ Restructuring
→ Or inflation
And Japan doesn’t break in isolation.
They hold trillions in foreign assets:
Over $1T in U.S. Treasuries
Hundreds of billions in global stocks and bonds.
Those investments only made sense when Japanese yields paid nothing.
But now, after today’s rate hike, domestic bonds finally offer real returns.
After currency hedging?
U.S. Treasuries actually lose money for Japanese investors.
This isn’t panic.
It’s arithmetic.
Capital comes home.
Even a few hundred billion flowing back to Japan isn’t orderly - t’s a liquidity vacuum.
Then there’s the real accelerant:
The yen carry trade.
Over $1 TRILLION borrowed cheaply in yen and deployed into stocks, crypto, and emerging markets.
As Japanese rates rise and the yen strengthens:
→ Trades unwind
→ Margin calls hit
→ Forced selling begins
→ Correlations go to one
Everything sells off together.
At the same time:
→ U.S.–Japan yield spreads are tightening
→ Japan has less incentive to keep money abroad
→ U.S. borrowing costs rise
And the Bank of Japan may not be finished.
Another hike after today?
The yen spikes.
Carry trades detonate harder.
Risk assets feel it instantly.
Japan can’t just print anymore.
Inflation is already elevated.
Print more → Yen weakens → Imports surge → Domestic pressure explodes
They’re trapped between debt and currency, and the walls are closing in fast.
For 30 years, Japanese yields were the invisible anchor holding global rates down.
Every portfolio since the 1990s depended on it - knowingly or not.
That anchor just snapped.
Bonds fall.
Stocks fall harder.
Crypto falls hardest.
This is how “everything’s fine” turns into everything breaking at once.
We’re entering a market no living trader has navigated before.
I’ve been calling major tops and bottoms for over 10 years.
I warned you before Japan shook markets in 2025.
And after today’s rate hike - I’m warning you again.
Follow and turn on notifications before it’s too late.
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