This month, don't just stare at the Fed. The real bomb was in Japan.

The country, which has been silent for more than two decades, is sending a signal that could rewrite global capital flows — and the danger of this signal may be grossly underestimated.

Let's look at the data first. Over the past week, Japanese government bond yields have soared across the board: the 30-year rate hit a record high, the 10-year rate approached 1.9% (the first time in nearly 17 years), and the 20-year rate also rushed to a multi-year high. For a country that has stabilized interest rates for 20 years, this is equivalent to hitting the restart button.

More ruthless behind. Bank of Japan Governor Kazuo Ueda rarely released hawks early - he directly named the December meeting "discretionary", breaking the Bank of Japan's 20-year practice of never hinting in advance. Outcome? The market's expected probability of raising interest rates instantly soared from 20% to more than 80%.

Remember last August? The Bank of Japan only raised interest rates slightly by 0.15%, resulting in the Nikkei index plummeting 12%, U.S. stocks diving, Bitcoin falling 12% in three weeks, and the global market evaporating hundreds of billions of market value. And this time? This is a complete normalization of interest rates. The impact is as strong as you think.

Why must Japan raise interest rates? The core reason is that its economy has finally come out of the deflationary trap.

After the bubble burst in the 90s, Japan was mired in a deflationary cycle of low prices, low wages, and shrinking demand. But from 2023 to 2024, a turning point has occurred: core CPI has exceeded 2% for one consecutive year, corporate earnings growth has exceeded 3%, and wage growth has exceeded 5% - this is the first time since 1991 that Japan has formed a positive cycle of "rising wages→ increasing consumption → rising inflation".

This is a signal that the Bank of Japan has been waiting for more than two decades.

If interest rates remain low now, the yen will continue to depreciate, import costs will soar, and eventually eat up corporate profits and wage increases, and the whole cycle will collapse again. Therefore, the normalization of interest rates is no longer a multiple-choice question, but a mandatory question.

So the question is: why is the global market so panicked?