The Bank of Japan confirmed a 25 basis point rate hike, the yen weakened, the 2-year Japanese government bond yield remained stable, and the 10-year and 30-year Japanese government bond yields declined.
The rate hike has landed + the US dollar's hawkish rate hike keeps the US-Japan interest rate differential sufficiently wide, arbitrage trading continues, and the rate hike landing actually causes the yen to weaken further.
For risk markets, this is good in the short term but requires caution in the medium to long term.
Good news: In the short term, there is ample yield spread in the US-Japan bond market, so there is no need to worry about liquidity tightening caused by arbitrage trade unwinding.
Bad news: After the yen rate hike is confirmed, most central banks globally will enter a rate hike cycle. Going forward, it is necessary to observe whether global rate hike resonance leads to risk-averse funds flowing back into bonds, causing liquidity shortages in financial markets.
Next, we will watch the Bank of Japan governor's speech to see if hawkish views continue to be expressed. If the yen also hikes hawkishly, the yen will appreciate and rebound! #美联储10月再加息概率破55%
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