Japan's 10-year government bond yield hit a new high since the 08 financial crisis! The warning line is at 2%, and once it is broken, it indicates that the era of low interest rates will end, and we will usher in a chaotic era of high interest rates + high asset pricing + high inflation! In the past few decades, Japan has been the "ultimate representative" of the world's negative interest rate and low interest rate policy. The 10-year Treasury yield has been lying around 0% all year round, and the logic behind it is: ✅ Deflation + population aging ✅ Central bank unlimited bond purchases (YCC: yield curve control) ✅ Yen assets are treated as "free pools" and are widely used for global carry trade. Now that the yield has soared to 1.6%, it means that bond prices have plummeted, yields have risen, and some people have begun to sell Japanese government bonds, and in the short term, it may be that the market is testing "whether the Bank of Japan still dares to control the bond market without a bottom line", if it breaks through 2%, it is equivalent to the market and the Bank of Japan officially going to war. In the past many years, Japanese institutions (such as life insurance and pensions) have lent funds to the world (US bonds, European bonds, and even US stocks) because their domestic returns are too low. Now, if JP10Y can give a return of 1.6%-2%, then there is an opportunity to "make money lying down": 1️⃣ Japanese funds may sell U.S. bonds, European bonds, and foreign stocks → return to Japan to buy domestic bonds 2️⃣ U.S. bonds, European bonds, and risk assets may all be under pressure due to reduced liquidity 3️⃣ If the Fed does not cut interest rates quickly, the pressure will increase. The Japanese bond market is beginning to "wake up" as a "debt godzilla" that is waking up, which is not only a matter for Japan, but also a signal of the repricing of global interest rates and capital structures. Be cautious ⚠️