The Bank of Japan is expected to raise its policy rate to 1.25% during its upcoming meeting, marking the highest level since April 1995. Market data shows that short-term bond yields have risen sharply, with the 3-month yield hitting 1.25% and the 6-month yield reaching 1.34%.
Economists surveyed by Reuters overwhelmingly anticipate the rate hike, with nearly 90% projecting rates to reach 1.50% by the end of March 2027. The 10-year government bond yield has also climbed to 3%, a level not seen since 1996, while the 2-year yield currently stands at approximately 1.85%.
The yen has appreciated by roughly 6% from its July low, supported by a joint intervention from Japan and the United States totaling ¥15.4 trillion. Additionally, Japanese holdings of US Treasuries decreased by $122.6 billion between February and June, while the Nikkei 225 index has declined 8.4% over the past month.
Despite these shifts, Bitcoin has remained relatively stable, trading near $77,721. This contrasts with the market reaction in August 2024, when a smaller rate hike to 0.25% triggered a 12.4% drop in the Nikkei 225 and a significant decline in Bitcoin's price from $70,000 to $49,000.
