The Bank of Japan is hiking rates again today, pushing Japanese government bond yields to levels not seen in decades. $SENT
Japan is sitting on nearly $10 TRILLION in government debt, and that number keeps growing. $BTC
When rates were near zero, this was manageable.$ETH
With higher yields, the math becomes dangerous.
Higher rates mean:
→ Debt servicing costs surge
→ More government revenue goes to interest
→ Less money for growth, stimulus, or stability
This is how sovereign stress starts.
No country exits this cleanly:
→ Default
→ Restructuring
→ Or inflation
And Japan is not isolated.
Japan holds massive foreign assets:
→ Over $1T in U.S. Treasuries
→ Hundreds of billions in global stocks and bonds
Those investments only worked when Japan paid almost nothing on its own debt.
Now domestic bonds finally offer real yield.
After currency hedging, U.S. Treasuries can become unprofitable for Japanese investors.
So capital has a reason to come home.
Even $200–300B flowing back isn’t “normal.”
It’s a liquidity vacuum for global markets.
Now add the real trigger:
💣 The Yen Carry Trade
Over $1 TRILLION was borrowed in cheap yen and invested in:
→ Stocks
→ Crypto
→ Emerging markets
As Japanese rates rise and the yen strengthens:
→ Trades unwind
→ Margin calls hit
→ Forced selling begins
→ Correlations go to 1
Everything sells together.
At the same time:
→ U.S.–Japan yield spreads are tightening
→ Japan has less reason to fund U.S. deficits
→ U.S. borrowing costs rise
→ Global liquidity tightens
And the BoJ may not be done.
Another hike would mean:
→ Stronger yen
→ Faster carry trade liquidation
→ Sharper pressure on risk assets
Japan can’t freely print anymore.
Inflation is already elevated:
Print more → Yen weakens → Imports get expensive → Domestic crisis deepens
They are trapped between:
Debt stability
and
Currency stability
For 30 years, Japan’s near-zero yields were the invisible anchor of global finance.
They kept global borrowing cheap.
They funded leverage everywhere.
That anchor is lifting.
When it does:
→ Bonds fall
→ Stocks fall harder
→ Crypto falls hardest
This isn’t panic.
It’s arithmetic.
This is how “everything is fine” becomes everything reprices at once.
No living trader has seen a market built without Japan as a zero-rate backstop.
I warned before Japan moved markets in 2025.
After today’s hike, the warning is stronger.
Watch the yen.
Watch Japanese yields.
Watch liquidity.
That’s where the next shock begins.
#Japan #BoJ #Yen #GlobalLiquidity #MarketCrash #CarryTrade
