🚨 WARNING: IF JAPAN HIKES TO 1.00%, GLOBAL LIQUIDITY COULD SNAP
According to Bank of America, the Bank of Japan is expected to raise rates to 1.00% in April.
Japan hasn’t seen 1.00% since the mid-1990s.
And if you think Japan doesn’t matter to global markets…
You’re underestimating one of the biggest liquidity engines in the world.
Why This Is a Big Deal
Japan isn’t just another economy.
It’s the world’s cheap funding hub.
For decades, ultra-low Japanese rates fueled global carry trades — borrowing in yen, investing in higher-yielding assets worldwide.
When Japan tightens, that trade unwinds.
And unwinds are not gentle.
The 1994–1995 Precedent
The last time Japan operated in this zone, the global system was already fragile.
In 1994, the bond market experienced the “Great Bond Massacre” — roughly $1.5 trillion in bond value was wiped out globally.
Then in early 1995, stress escalated.
On April 19, 1995, USD/JPY collapsed to ~79.75 — a historic low for the dollar.
Later that year?
Japan had to reverse course.
The BOJ cut its discount rate back down to 0.50% by September 1995.
That tells you something important:
When Japan tightens into a stressed system, it rarely stays contained.
Why It Matters Today
Japan holds roughly $1.2 trillion in U.S. Treasuries.
That makes it one of the largest foreign creditors of the United States.
If domestic yields rise in Japan:
• Japanese capital has incentive to come home
• Global bond demand shifts
• Funding conditions tighten
• Carry trades unwind
This isn’t just about “rates going up.”
It’s about global liquidity plumbing.
Markets may not be pricing this risk right now.
But if tightening collides with a fragile macro setup, repricing can happen fast.
This is not panic.
It’s positioning awareness.
When a structural cheap-money anchor starts lifting rates, volatility tends to follow.
Stay alert.
