{"id":442112,"date":"2026-11-12T19:40:06","date_gmt":"2026-11-12T12:40:06","guid":{"rendered":"https:\/\/www.swingfish.trade\/blog\/market-news\/how-could-japan-shake-up-the-global-markets-442112\/"},"modified":"2026-11-12T19:40:06","modified_gmt":"2026-11-12T12:40:06","slug":"how-could-japan-shake-up-the-global-markets","status":"publish","type":"post","link":"https:\/\/www.swingfish.trade\/blog\/market-news\/how-could-japan-shake-up-the-global-markets-442112\/","title":{"rendered":"How could Japan shake up the global markets?"},"content":{"rendered":"
\n

How could Japan shake
\n up the global markets?<\/p>\n

Minutes from the Bank
\n of Japan\u2019s October meeting point to another rate hike in December, and it\u2019s
\n easy to see why.<\/p>\n

The weak yen and
\n rising energy costs driven by Middle East tensions have pushed core inflation
\n to 2.1% year over year in September, its highest level since early 2026 and
\n above the BOJ\u2019s 2% target, while the measure excluding food and energy climbed
\n to 2.4%. Higher oil prices<\/a>add to these inflationary pressures, particularly because
\n Japan relies heavily on energy imports. This also makes oil prices an important
\n factor to watch when assessing the BOJ\u2019s next policy move.<\/p>\n

As for why the BOJ is
\n holding back, even though the conditions for a hike are already in place, a
\n tighter policy could help bring inflation under control and ease pressure on
\n the yen, but it would also make borrowing more expensive, potentially cooling business
\n activity and investment.<\/p>\n

Another reason is Japan\u2019s massive
\n government debt<\/a>, which exceeds 200% of GDP. Rather than paying it off, the
\n government keeps rolling over maturing bonds by issuing new ones, while
\n continuing to pay interest on its debt.<\/p>\n

This means that higher
\n rates would make that debt increasingly expensive to service, putting even more
\n pressure on public finances and raising concerns about long-term debt
\n sustainability.\u00a0<\/p>\n

Currency intervention
\n could also help ease some of this pressure. By selling US dollars and buying
\n yen, Japan\u2019s authorities can support the currency and curb imported inflation.
\n Such intervention could also trigger a sharp move lower in USD\/JPY<\/a>,
\n depending on its scale and how markets interpret the authorities\u2019 intentions.
\n The yen they receive can then be withdrawn from circulation, reducing liquidity
\n in the economy.<\/p>\n

The catch is that
\n Japan\u2019s reserves, while substantial, are not unlimited. And a large part of
\n them is held in US Treasuries.<\/p>\n

If Japan starts
\n selling those bonds to support the yen rather than hiking rates, Treasury
\n yields could climb, putting pressure on global markets, particularly riskier
\n assets. After all, why take risks in stocks when you can earn a relatively safe
\n 5% on government bonds?<\/p>\n

A Fed rate cut could
\n offer relief to both US and Japanese markets by making the yen carry trade less
\n attractive, but with inflation still running hot and the labor market holding
\n up, that looks unlikely for now.\u00a0<\/p>\n

On the other hand, if
\n the Fed does move in the opposite directionto BOJ and the carry trade unwinds,
\n it could create another problem: investors who borrowed yen to buy foreign
\n assets may be forced to sell them to repay their loans. This could trigger a repeat
\n of the 2024 sell-off across markets.\u00a0<\/p>\n

\u00a0<\/p>\n

This article was written by IL Contributors at investinglive.com.<\/p><\/div>\n","protected":false},"excerpt":{"rendered":"

How could Japan shake up the global markets? Minutes from the Bank of Japan\u2019s October meeting point to another rate hike in December, and it\u2019s easy to see why. The weak yen…<\/p>\n","protected":false},"author":216,"featured_media":0,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[86],"tags":[],"class_list":["post-442112","post","type-post","status-publish","format-standard","hentry","category-market-news"],"_links":{"self":[{"href":"https:\/\/www.swingfish.trade\/blog\/wp-json\/wp\/v2\/posts\/442112","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.swingfish.trade\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.swingfish.trade\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.swingfish.trade\/blog\/wp-json\/wp\/v2\/users\/216"}],"replies":[{"embeddable":true,"href":"https:\/\/www.swingfish.trade\/blog\/wp-json\/wp\/v2\/comments?post=442112"}],"version-history":[{"count":0,"href":"https:\/\/www.swingfish.trade\/blog\/wp-json\/wp\/v2\/posts\/442112\/revisions"}],"wp:attachment":[{"href":"https:\/\/www.swingfish.trade\/blog\/wp-json\/wp\/v2\/media?parent=442112"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.swingfish.trade\/blog\/wp-json\/wp\/v2\/categories?post=442112"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.swingfish.trade\/blog\/wp-json\/wp\/v2\/tags?post=442112"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}