The Bank of Japan signals tightening, breaking the last "cheap money" dream worldwide. What does this mean? Capital flows will become more complex.

Once the central bank begins a gradual rate hike cycle, global financing costs will rise. For major players like Japanese insurance companies and pension funds, domestic interest rate increases will reduce the attractiveness of overseas investments. Some funds will flow back from US and European bond markets, pushing up long-term interest rates there. More concerningly, traders engaging in global arbitrage using yen borrowing will face higher transaction costs, which may lead to concentrated liquidations and a flow back, intensifying volatility in global risk assets.

Of course, this process won't happen overnight. But there's a hidden risk: the Japanese government is "injecting liquidity" (loose fiscal policy), while the central bank is "tightening" (monetary tightening), two opposing directions. The result could be increased pressure for yen depreciation, possibly triggering intervention in the currency market. For investors, deleveraging is the first step, followed by closely monitoring key economic data from Japan and the US to stay in sync.