The Bank of Japan's December meeting will raise interest rates, potentially ending over twenty years of ultra-loose monetary policy, causing a massive upheaval in global markets.
The core reason is that the Japanese economy is emerging from deflation, with wages and prices forming a virtuous cycle, making interest rate normalization imperative.
The key point is: the global scale of the "yen carry trade" (borrowing low-cost yen to invest in high-yield overseas assets) worth trillions of dollars will face a reversal. Once the yen strengthens due to interest rate hikes, it will trigger large-scale liquidation and selling, with the most liquid U.S. tech stocks, Bitcoin, and Asian markets likely to be the first to feel the impact.
For investors, it is crucial to remain vigilant about market volatility, pay attention to changes in liquidity, and consider increasing allocations to safe-haven assets to defend against risks.
