As markets enter the holiday season, liquidity is thinning and volatility is rising and while most attention is on U.S. monetary policy and political developments, there’s another story quietly shaping global risk conditions: Japan. JPMorgan now expects the Bank of Japan to hike rates twice in 2025, potentially pushing policy rates toward 1.25% by the end of 2026. At first glance, these moves may seem modest, but for a market that has relied on decades of ultra-loose monetary policy, even incremental shifts have outsized consequences.
For years, the yen has been the preferred funding currency
For years, the yen has been the preferred funding currency
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