What’s happening in Japan right now doesn’t feel like a normal move in the bond market. Yields are at multi-decade highs and rising across maturities.
To me, it looks more like the old regime of cheap money is starting to break.
And that’s a big deal.
Japan has been a kind of silent anchor for years. A massive source of cheap capital holding things together. If this starts to unwind, it’s hard to see it staying just a local story.
What this could mean, in my view:
- higher yields in the US and Europe (less Japanese capital flowing abroad)
- pressure on equities, especially growth and tech
- the end of ultra-cheap financing
- a fast and pretty painful carry trade unwind
- more volatility than markets have been used to
On top of that, a weaker yen, higher energy costs, and still-elevated inflation — not exactly a calming mix. If anything, it adds fuel.
This fits into a bigger picture for me. The world is gradually moving away from the era of cheap money.
Maybe things stabilize. Maybe the BOJ steps in again and pushes yields back down.
But the longer this lasts, the more it feels like the beginning of something bigger.
And if that’s the case, it won’t be just about Japan.
To me, the market is still underestimating this.
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