Bank of Japan's rate hike imminent: End of the 30-year ultra-low interest rate era, U.S. Treasury yields may trigger a global reallocation of funds

【CryptoPush】The Bank of Japan will announce its interest rate decision today, expected to be released between 10:30 AM and 12:30 PM (usually around 10:45-11:30). Governor Ueda Haruhiko will hold a press conference at 14:30 to discuss policy outlook.

The market has already priced in the rate hike expectation—there is a 98% probability of a 25 basis point increase in December. If executed as expected, Japan’s benchmark interest rate will rise from the current 0.50% to 0.75%, the highest level since 1995. For the Japanese economy, this marks a historic turning point: the end of a 30-year ultra-low interest rate policy.

But the ripple effects of the rate hike go far beyond Japan. Wall Street’s biggest concern is the reshuffling of capital flows. As the largest foreign creditor of the United States, Japan currently holds about $1.2 trillion in U.S. Treasury bonds. If Japanese bond yields rise, it will inevitably attract investors to withdraw funds from the U.S. market, which will directly push up U.S. Treasury yields.

This creates a new constraint on the Federal Reserve’s rate-cutting pace. The decline in U.S. Treasury yields this year has supported the Fed’s new round of rate cuts, lowering mortgage costs and boosting stock market performance—low Treasury yields are essentially a catalyst for risk assets. But if U.S. Treasury yields rise again, the entire logical chain will reverse, with the outlook for rate cuts being continuously suppressed, and the rebound potential of risk assets will also narrow.