One ETF TOPIX (1473)
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A 25-basis-point rate hike by the Bank of Japan next week is all but certain, with the real uncertainty shifting to "how quickly rates will rise thereafter."
According to informed sources, the Bank of Japan is highly likely to raise interest rates next week, with a 25-basis-point hike best aligning with current assessments. As oil prices surge back above $100 per barrel, market focus has shifted from “whether rates will be raised” to whether Kazuo Ueda will open the door to accelerated tightening in subsequent meetings. However, he may continue to leave the terminal rate unspecified.
Stock Market News Today, September 11 – Futures Rise Ahead of Key CPI Data
Market expectations for a Bank of Japan rate hike have accelerated to a quarterly timeline. Beware of the unwinding of carry trades amplifying volatility in equity and bond markets.
All 52 economists surveyed by Bloomberg expect the Bank of Japan to raise borrowing costs at the conclusion of its two-day meeting on September 18, with 93% anticipating another move by January. Economists forecast an acceleration in the pace of policy normalization, with approximately 46% expecting the central bank to increase interest rates at a frequency of roughly once per quarter.
Strong yen sparks divergence between bulls and bears: Hedge funds bet on 140, while retail investors increase short positions against the trend
The foreign exchange market is witnessing a rare showdown between bulls and bears. The yen has appreciated by approximately 4% this month, with hedge funds scrambling to position themselves in call options; aggressive traders are betting that the USD/JPY exchange rate will fall to 140 within the year. In contrast, Japanese retail investors have maintained net short positions exceeding JPY 3.6 trillion against the trend. If forced into concentrated liquidation, these positions could create a resonance effect that further amplifies the yen's rally. Expectations of an interest rate hike by the Bank of Japan, combined with statements from the U.S. Treasury Secretary supporting yen appreciation, indicate that this battle between bulls and bears is entering its most critical decisive window.
“I am now the house; come and bet against me if you dare.” Bessent warned the market not to challenge him by shorting the yen.
Bessent stated, “When we intervene in the yen market, I have a thorough understanding of what the Japanese authorities, the Bank of Japan, and Japanese policymakers will do.” Coupled with the fundamental support from the Bank of Japan’s expected 25-basis-point rate hike this month, short sellers will face a dual onslaught from both policy intervention and a shift in interest rates. Analysts believe that Bessent’s tough rhetoric serves not only as psychological pressure but also hints that further actions are poised to follow.
Japanese media: The Bank of Japan is expected to raise interest rates by 25 basis points next week, with the pace of hikes potentially accelerating to "once per quarter."
Expectations of a rate hike by the Bank of Japan are intensifying, with Japanese media reporting that the central bank may raise rates by 25 basis points to 1.25% at next week's meeting. The pace of tightening could also accelerate from once every six months to once per quarter. Yen depreciation and rising oil prices have pushed up inflation, serving as key drivers for an accelerated policy shift, although internal divisions remain within the central bank regarding the path of rate hikes.
Express News | According to Kyodo News, the Bank of Japan plans to raise interest rates to 1.25% at its meeting on September 17–18.
Japan's nominal wage growth in July hit a fresh high since 1997, bolstering the case for further interest rate hikes by the central bank.
Nominal wages in Japan rose 4.7% year-on-year in July, marking the largest gain since 1997, while real wages grew 2.4%, the highest level in five years, extending the streak of positive growth to seven consecutive months. The data broadly exceeded expectations, and combined with signals from Bank of Japan Governor Kazuo Ueda regarding potential rate hikes, market expectations for a rate increase in September have strengthened further. However, household consumption has declined for eight straight months, leaving the effectiveness of wage growth in stimulating domestic demand as the greatest uncertainty surrounding the central bank's policy path.
Japan suspected of selling U.S. Treasuries to fund record yen intervention, as foreign exchange reserves fall below $1 trillion
In August, Japan deployed a record approximately $98.6 billion to intervene in the foreign exchange market, raising suspicions of large-scale U.S. Treasury sell-offs for liquidity, which has added further supply concerns to an already stressed Treasury market. Data shows that Japan's foreign exchange reserves plummeted by $94.6 billion, falling below the $1 trillion threshold. In response, U.S. Treasury Secretary Bessent announced a doubling of long-term bond buybacks to stabilize the market. Additionally, Japanese officials have hinted at the potential future use of the FIMA repo facility, which can provide up to $60 billion in daily liquidity without the need to sell bonds.
How far can the yen's reversal go? Goldman Sachs: Structural recovery is "just getting started," while Bank of America forecasts a rise to 149 by year-end.
Goldman Sachs assesses that the correction of the yen's long-term structural undervaluation may have only just begun.
Songze Insights: Macro Strategy Weekly – The Goldilocks Market and De-dollarization Are Two Sides of the Same Coin
Key Views: The Federal Reserve may skip a rate hike in September, with technology and growth stocks poised for a rebound. Recent remarks by Fed officials have turned cautious, and market pricing indicates the probability of a September rate hike has dropped to 51%. Should the Fed ultimately skip a hike, excess USD liquidity is likely to once again drive outperformance in technology and growth stocks. Yen Appreciation: If the yen breaks through key levels, Japanese domestic-demand stocks will outperform export-oriented stocks. If the USD/JPY exchange rate falls below the key support level of 155, the market will assume the trend of a weak yen has ended, prompting capital to rotate from export-related equities to domestic-demand-related equities, with the latter showing more pronounced outperformance. De-dollarization trades coexist with a Goldilocks market, but the current risk lies in policy credibility.
Yen short positions begin to unwind! Capital repatriation and carry trade unwinding could trigger a "reversal rally"
Just six weeks ago, the yen’s exchange rate against the U.S. dollar touched its lowest level in four decades. Today, a confluence of factors is finally shaking the conviction of aggressive short-sellers who have bet on the yen’s depreciation for years, as the long-slumping currency approaches a pivotal turning point.
The Bank of Japan at a Crossroads: JGB Yields and Yen Volatility as Short-Term Guiding Factors
Key Takeaways: Market focus has shifted from growth to discount rates and monetary policy, while enthusiasm for the AI theme has cooled. Following hawkish remarks by Federal Reserve Chair Walsh at the Jackson Hole symposium, global equity markets opened September with heightened volatility, as investors closely monitored interest rate trends in Japan and the United States. Waning market interest in AI-related topics, coupled with rising attention to monetary policy measures such as rate hikes, has driven capital flows from growth-oriented themes to sectors sensitive to discount rates. Rising real interest rates have dampened equity market sentiment, with CTA strategies exacerbating short-term volatility. The accelerated rise in real 10-year bond yields in major markets, including Japan and the United States, has placed additional pressure on equity market sentiment.
As Japanese Capital Returns Home: Is the Break of the 3% Threshold in JGB Yields Reshaping Global Capital Flows?
① As Japan’s benchmark 10-year government bond yield breaks through the 3% barrier for the first time in three decades, higher returns are beginning to attract Japanese capital held overseas to flow back home; ② This could reverse the once-stable trend of Japanese capital inflows into global markets...
The yen surged suddenly amid renewed rumors of Japanese intervention, prompting a rebound in gold and silver prices.
The yen strengthened sharply on Wednesday, while the U.S. Dollar Index recorded its largest intraday decline since August 21, with spot gold approaching $4,400. Rumors circulated that Japanese authorities had intervened again, but traders viewed the magnitude of the gain as insufficient to confirm intervention.
The Hidden Risk in the Global Bond Market Sell-off: Rising Neutral Rates May Require More Aggressive Hikes by Major Central Banks
Global bond yields are struggling to rise toward a higher neutral interest rate level.
A "slow bear" market is emerging in global bonds in 2026: while less severe than in 2022, the pain may be more prolonged.
Recently, global bond prices have declined, though not as sharply as the plunge seen in 2022.
Following Kazuo Ueda's hint at a September rate hike, a Bank of Japan board member stated that the magnitude of the increase would not necessarily be 0.25%.
Hajime Takada, a hawkish member of the Bank of Japan's Policy Board, has added another variable to the outlook for the September policy meeting. While an interest rate hike is highly probable, the magnitude may not align with the market's inertial expectation of 0.25 percentage points.
Japanese bond yields break records; Bessent pressures yen; Bitcoin carry trades face liquidation risk
Japanese government bond yields have hit record highs, with U.S. Treasury Secretary Bessent publicly pressuring Japan to raise interest rates. As the cost of yen carry trades rises and potential unwinding looms, crypto assets such as Bitcoin face liquidity shocks, with market focus shifting to the central bank's decision on September 18.
The Global Bond Market's "Anchor" Shows Signs of Loosening: What Does the Return of Japan's 10-Year Yield to 3% Mean? Insights from Multiple Experts
Japanese government bond yields surged across the board, with the benchmark 10-year yield touching the 3% mark for the first time since 1996.