The market narrative says the yen is “stabilizing.”
The Yen Is Not Recovering. It Is Being Repriced. Tokyo, the BoJ, and the Return of Bond Vigilantes The market narrative says the yen is “stabilizing.” That interpretation is dangerously incomplete. What is happening now is not a normal FX rebound. It is the beginning of a systemic repricing across Japan’s entire macro-financial structure: the yen, Japanese government bonds, BoJ credibility, fiscal sustainability, domestic inflation expectations, and global carry trade architecture. For nearly three decades, Japan operated under an extraordinary equilibrium: near-zero interest rates, artificially compressed sovereign yields, structurally weak currency, domestically captive capital, and a central bank willing to absorb duration risk indefinitely. That equilibrium is now breaking under simultaneous pressure from: imported inflation, rising oil prices, global bond selloffs, fiscal expansion,
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