Take my advice, don't treat Japan's interest rate hike as some kind of financial bombshell. Let me explain.

This rate hike to 0.5% was actually expected. Since the Bank of Japan first ended negative interest rates in March last year, this is the third adjustment, so it's not an unexpected event. If there was really going to be panic, it should have happened during the first rate hike in March last year.

Let's also look at the interest rate differential. Japan's current rate is 0.5%, while in the US it's 5.25%-5.5%, with a gap of nearly 5 percentage points. This still leaves ample arbitrage space, and large funds have no reason to rush to completely exit the yen. According to market estimates, the total size of global yen arbitrage trading might be just a few hundred billion dollars. Compared to the much larger global financial markets, the impact is actually quite limited.

Looking at history makes this clear. During the March last year rate hike, US stocks even rose slightly that day, and Bitcoin, although it pulled back initially, recovered the next day. The July rate hike to 0.25% caused short-term volatility in US stocks, but they quickly resumed their upward trend, and Bitcoin followed the same rhythm. When the rate was raised to 0.5% in January this year, the market reaction was rather muted, and the subsequent decline was mainly driven by other macro factors.

So, Japan's rate hike itself is not the main factor determining market direction. The current tension is more due to everyone's overactive imagination about the news. Since Japan's economy has already fallen out of the top three globally, there's no need to overhype its monetary policy adjustments. We should instead focus on the movements of more core economies and the market's own logic. I recommend everyone stay calm, look at the data more, and be less swayed by emotions.