The real risk isn't with the Fed, it's with Japan 🇯🇵

Over the past two months, Japanese government bond yields have surged across the board: the 10-year yield has jumped 20%, nearing a 17-year high, and the 30-year yield has hit a record high.

For a country that has maintained near-zero interest rates for almost 20 years, this isn't just volatility—it's the restart of the interest rate era.

🚩 Why is the world afraid of Japan raising rates?

Remember last July—Japan just nudged rates up a bit (from 0.1 to 0.25), and the result was a sharp selloff across US stocks, Bitcoin, and Asian stock markets. This time, Japan doesn't seem to be just lifting a foot—it looks like it's about to "stand up and walk."

So, why does Japan have no choice but to raise rates?

Because after losing 30 years, Japan's economy has really woken up: core CPI has stayed above 2% for years, and wage growth has hit a 30-year high.

But years of low rates are now backfiring: the yen is depreciating, import costs are soaring, CPI is rising, and wage gains are being eroded. To protect its hard-won economic recovery, Japan has no choice but to raise rates and normalize policy.

What does this mean? It means the "cheapest funding pool" that has supported global markets for over a decade—Japan's zero interest rates—is about to be shut off.

The core risk lies here: trillions of dollars in global yen carry trades are being pushed to the edge.

The logic of the carry trade is simple:

Borrow low-cost yen in Japan → Convert to USD → Buy US Treasuries, US stocks, Bitcoin, real estate

As long as the yen doesn't appreciate, it's easy money.

But once Japan raises rates and the yen strengthens, this chain reverses instantly:

Borrowing costs rise → Assets held shrink in yen terms → Forced selling to cover positions → Global stampede

This isn't speculation; it's happened before.

⛑️ Why is the risk greater this time?

Japanese government bond yields are now completely uncontainable. Bond yields are set by the market and are a leading indicator, forcing the central bank to raise rates.

The Bank of Japan has turned hawkish and is proactively "stress-testing" the market.

The market is starting to price in "Japan entering a rate-hike cycle," not just a one-off move.

With policy out of sync with the Fed, capital flows are even more uncertain, creating a negative spiral.

Plus, in the recent period, assets like Bitcoin, US stocks, and gold have already overreacted to macro policy.

The "super low-cost funding chain" the world has relied on for more than a decade is now reversing.
The shock will spill over from US stocks → crypto → Asian markets → global asset pricing.

So, it's time to shift our focus from the Fed to Japan and prepare for possible disruptions in the asset chain. Now is far from the time to go all-in, and always remember to set stop-losses.