Traders, the final sprint of the week has begun. Tomorrow is Friday, but the next two days might be the most testing moments for your mindset since December.

Tonight, there are a bunch of major events to digest: US CPI data (likely to have limited impact), interest rate decisions in the UK and Europe, Japan’s rate hike implementation, plus the long-term game behind the Federal Reserve’s candidate selection—entwined interests from all sides, destined to be a protracted battle.

First, let’s talk about Japan’s rate hike. The market reaction is intense: foreign capital has flooded into Japanese government bonds (JGBs) with a weekly net purchase of 1.4 trillion yen (about $91 billion). Ordinary Japanese people aren’t sitting idle either, collectively moving deposits from banks into the government bond market. This year alone, individual bond purchases have surpassed 5 trillion yen (about $320 billion), a new high since 2007.

Think about what JGBs used to be—basically “worthless assets” with no yield. But after the rate hike, yields jumped from near zero to 0.7%. For investors used to low-yield environments, this is like a gift from heaven. Putting 1 million yen in a bank earns only 100 yen a year, but buying government bonds can earn 7,000 yen. Comparing the two, people are lining up to transfer their savings.

Looking at the European Central Bank (ECB), they’re basically standing pat—inflation is approaching the 2% target, and the economy isn’t strong enough to warrant a rate hike. Based on previous statements from top officials, the chances of rate cuts or holding rates steady are quite high. Short-term eurozone bond yields simply can’t rise, and compared to Japanese bonds, eurozone bonds are just not as attractive—Japanese bonds are flying off the shelves with high yields.

International capital isn’t stupid; they’re calculating clearly: the returns on Japanese bonds are much higher than those on eurozone bonds. As a result, Japanese bonds have become high-yielding stars among low-risk assets, with enormous appeal.

This week’s key focus remains on Ueda and the Bank of Japan’s press conference—listening to see if he’s truly hawkish or just testing the waters, whether he hints at further rate hikes. These details will determine how the yen and Japanese bonds move next.

What do you think? Will the ECB choose to stand pat or have other plans? Will Ueda’s speech lean hawkish or dovish? Share your thoughts in the comments.