The dominoes are falling, and the hand that pushed them is in Tokyo.

Most investors watch the Fed, but right now, the Bank of Japan holds the key to global risk appetite. Here’s why:

Japan is the world’s largest creditor nation. Decades of trade surpluses built a multi-trillion dollar pool of overseas investments; much of it parked in U.S. assets.

Now, something unprecedented is happening. The market is pricing in a potential BOJ rate hike in December. This has sent Japanese Government Bond (JGB) yields soaring to 20-year highs.

Capital is coming home. Why hunt for yield abroad when you can earn more, safely, in Japan? This means Japanese investors are selling foreign holdings; especially U.S. Treasuries and equities to repatriate funds.

And when liquidity retracts, the most speculative assets fall first. This is why we’re seeing pressure across risk markets. Crypto, as the highest-beta risk asset, often leads the move down.

The trigger? A sinking Yen. With the yen weak (USD/JPY ~155-160), the BOJ is under pressure to hike and defend its currency, even at the risk of disrupting global capital flows.

The takeaway: Don’t just watch Jerome Powell. Watch Kazuo Ueda. Global liquidity is shifting, and the move in JGB yields is the early tremor.

What’s your read on the BOJ’s next move?