OCBC strategists warn that Japan’s continuing yen depreciation, driven by perceptions that the BOJ lags behind global policy shifts, could spark global volatility.

The Bank of Japan’s stance fuels expectations that future rate hikes will stem more from the Takaichi administration’s policy path than from economic data. A further drop in the yen would weigh on regional currencies like the won and the baht, yet analysts see a larger risk_ul from higher long‑end JGB yields.

A 30‑year Japanese Treasury auction of about 600 billion yen highlighted this risk. The 10‑year JGB yield remains at 2.830%, while the 30‑year yield has risen 1 bp to 4.085%—a level that already pressures U.S. Treasuries, gilts, and bunds. If JGB yields climb further, global benchmark yields could lift, tightening credit conditions worldwide.

Investors and corporates should monitor Japan’s sovereign debt market closely, as elevated yields may raise borrowing costs and shift risk appetite across emerging‑market and developed‑market debt portfolios.