Tomorrow's Japanese Bank of Japan interest rate decision is all over the news, but honestly, many people are just parroting the rumors. Some see it as just another ordinary news event, while others have no concept of what a rate hike in Japan really means. So today, let's delve into the background of Japan's rate hike and my thoughts on the subsequent market trends.

First, I need to clarify—this rate hike from Japan is definitely not an ordinary piece of news. From a different perspective, its significance is on par with, or even more powerful than, a US rate cut.

Why do I say that? There's a pattern you can observe: in all news events, the first and last occurrences tend to cause the biggest waves because they are the most unexpected by the market, leading to the craziest volatility. Looking back at several US rate cuts, isn't it clear that each response has become more subdued? This leads to a conclusion—once Japan's rate hike is implemented, the market volatility it causes will definitely far exceed the magnitude of the US rate cut in December.

Now, the key question: how will Japan's rate hike actually change the market?

Here's a heads-up: if the Bank of Japan doesn't raise rates tomorrow, don't worry. They will definitely hike in the coming months. It's not a matter of "if," but "when."

If they do hike, the yen interest rate will likely rise to 0.75%. It sounds insignificant, but in Japan's historical context, it's explosive—Japan hasn't experienced such a rate level in over 30 years.

Looking back, Japan's previous two rate hikes caused quite remarkable chain reactions. The first was in 2000, which directly ended the internet bubble. The second was in 2008, which acted as a catalyst for the US subprime mortgage crisis. The stories behind these two events have already cost the market dearly. So, at this moment, what kind of reactions will this trigger? It's really worth pondering carefully.

Some might ask, why can the yen cause such a dramatic chain reaction in the international financial markets?

The answer is quite simple—because over the years, the yen has always been "dirt cheap." Zero interest rates, negative interest rates—basically, borrowing yen costs almost nothing. Once this low-interest environment reverses, it will be like pulling out a key support pillar for market participants relying on yen-denominated loans.

So don't underestimate this interest rate decision tomorrow; it might not only change the value of the yen but could also reshape the entire market's liquidity landscape.