Why a single interest rate hike splits into two directions

The moment the BOJ raises interest rates, the bond, foreign exchange, and stock markets are shaken simultaneously

BOJ interest rate hike (announced or implemented)

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① Bond market path

Existing low-interest government bond price decline → Increased valuation losses (BOJ, banks, life insurers)

② Foreign exchange and capital path

Yen appreciation → Carry trade liquidation (Yen buying + overseas asset selling)

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Increased global stock market volatility + increased fiscal interest burden