Blog

By Vivien Lou Chen

A stronger yen and rising Japanese bond yields could pull capital away from the U.S. equity and bond markets

Bank of Japan governor Kazuo Ueda.

Bank of Japan governor Kazuo Ueda delivered a speech on Monday that was heard by investors all around the world.

The BOJ official caused a stir in global markets by suggesting that the central bank could raise interest rates again as soon as later this month. The remark caused Japanese bond yields to rise sharply, while yields on other global sovereign bonds, from the U.S. to Europe and the rest of Asia, quickly followed suit.

Speaking to business leaders in Nagoya, Ueda said that the BOJ “will consider the pros and cons” of raising its policy interest rate at its upcoming policy meeting, which ends Dec. 19. The central bank last raised interest rates to 0.5% from 0.25% in January, bringing borrowing costs to their highest level in 17 years.

Ueda’s remarks, which come at a time when the Japanese economy is experiencing a moderate recovery, triggered a global bond-market selloff that impacted debt trading in Australia and New Zealand, as well as in France, Italy, Greece and the U.S. In the bond market, yields move in the opposite direction to prices, and rise whenever government debt sells off.

“The Bank of Japan is finally signaling an end of an era after decades of ultraloose policy,” said Ryan Jacobs, founder of Florida-based advisory firm Jacobs Investment Management. “American investors should pay close attention. A stronger yen and rising Japanese yields could pull capital away from the U.S. bond and equities markets, tightening financial conditions globally.”

On Monday, Japan’s 2-year yield BX:TMBMKJP-02Y spiked just above 1% and its 10-year yield BX:TMBMKJP-10Y jumped to almost 1.88% – the highest levels in at least 17 years. Meanwhile, the yen (USDJPY) strengthened against the U.S. dollar DXY by about 0.5%.

Yields and currencies tend to move alongside interest-rate expectations for specific countries, and rising Japanese bond rates were stoking concerns about a possible replay of the August 2024 unwind of the yen carry trade, which created a wave of volatility across global markets.

In the U.S., yields on the 10-year BX:TMUBMUSD10Y and 30-year BX:TMUBMUSD30Y Treasurys spiked by 7 basis points each to 4.09% and 4.74%, respectively, data showed. Meanwhile, major U.S. stock indexes DJIA SPX COMP moved lower in afternoon trading.

Between 1999 and early 2024, Japan was known for keeping interests at rock-bottom levels, and even below zero for eight of those years, as it pursued a monetary policy aimed at combating persistent deflation and stoking economic growth.

Before Ueda’s comments on Monday, investors had been more focused on the prospect of aggressive fiscal stimulus under Japan’s first female prime minister, Sanae Takaichi, and the possibility that a subsequent rise in yields might make the country’s bond market look more attractive relative to the U.S. and the rest of the world. But on Monday, Ueda gave investors another reason to push Japanese bond yields even higher.

Read: Why trouble for the biggest foreign buyer of U.S. debt could ripple through America’s bond market

“The market went into the weekend with the expectation that, given the new prime minister in Japan, the BOJ might be more hesitant before deciding its next move. It turned out to be the other way around and the BOJ appears to be ready to hike in December,” said Daniel Tenengauzer, a senior macro analyst at InTouch Capital Markets in New York.

With the yen still undervalued, Ueda’s comments about a potential rate hike were creating a desire by some investors to rebuild long positions in Japan’s currency, according to Tenengauzer. “If the BOJ is somewhat more hawkish, people will want to price this in across other markets.”

The Bank of Japan was not the only thing impacting the Treasury market on Monday, however.

In Tenengauzer’s view, a quarter-point rate cut by the Federal Reserve next week has been mostly priced in, leaving traders with little else to do but unwind long-bond exposures. In addition, anecdotal economic information about the U.S. suggests that “maybe things are not as bad as expected,” he said.

Thirdly, President Trump announced over the weekend that he has made his choice on who will next lead the Fed, and prediction markets are betting that Kevin Hassett, the director of the National Economic Council, will be the president’s pick. Hassett is expected to support aggressive rate cuts, raising some concerns that this may end up inadvertently boosting inflationary pressures.

-Vivien Lou Chen

This content was created by MarketWatch, which is operated by Dow Jones & Co. MarketWatch is published independently from Dow Jones Newswires and The Wall Street Journal.

  (END) Dow Jones Newswires

  12-01-25 1348ET
Copyright (c) 2025 Dow Jones & Company, Inc.

India’s telecoms ministry has privately asked smartphone makers to preload all new devices with a state-owned cybersecurity app that cannot be deleted, a government order showed, a move likely to antagonise Apple and privacy advocates.

In tackling a recent surge of cybercrime and hacking, India is joining authorities worldwide, most recently in Russia, to frame rules blocking the use of stolen phones for fraud or promoting state-backed government service apps.

Apple, which has previously locked horns with the telecoms regulator over development of a government anti-spam mobile app, is among the companies, such as Samsung, Vivo, Oppo and Xiaomi bound by the new order.

The 28 November order gives major smartphone companies 90 days to ensure that the government’s Sanchar Saathi app is pre-installed on new mobile phones, with a provision that users cannot disable it.

For devices already in the supply chain, manufacturers should push the app to phones via software updates, the ministry said in its order, which was not made public and was sent privately to select companies.

A lawyer specialising in technology matters said India’s move was cause for concern, however.

“The government effectively removes user consent as a meaningful choice,” said Mishi Choudhary, who works on internet advocacy issues.

Privacy advocates criticised a similar requirement by Russia in August for a state-backed messenger app called Max to be pre-installed on phones.

One of the world’s largest telephone markets, India has more than 1.2 billion subscribers, and government figures show the app, launched in January, has helped recover more than 700,000 lost phones, including 50,000 in October alone.

The government said the app was essential to combat “serious endangerment” of telecom cybersecurity from duplicate or spoofed IMEI numbers, which enable scams and network misuse.

Apple’s iOS powered an estimated 4.5% of 735m smartphones in India by mid-2025, with the rest using Android, according to Counterpoint Research.

While Apple pre-installs its own proprietary apps on phones, its internal policies prohibit installation of any government or third-party app before sale of a smartphone, a source with direct knowledge of the matter said.

“Apple has historically refused such requests from governments,” said Tarun Pathak, a research director at Counterpoint.

skip past newsletter promotion

after newsletter promotion

“It’s likely to seek a middle ground: instead of a mandatory pre-install, they might negotiate and ask for an option to nudge users towards installing the app.“

Apple, Google, Samsung and Xiaomi did not respond to requests for comment. India’s telecoms ministry also did not respond.

A 14- to 17-digit number unique to each handset, the IMEI, or International Mobile Equipment Identity, is most commonly used to cut off network access for phones reported to have been stolen.

The Sanchar Saathi app is mainly designed to help users block and track lost or stolen smartphones across all telecom networks, using a central registry. It also lets them identify, and disconnect, fraudulent mobile connections.

With more than 5m downloads since its launch, the app has helped block more than 3.7m stolen or lost mobile phones, while more than 30m fraudulent connections have also been terminated.

The government says the software helps prevent cyberthreats and assists tracking and blocking of lost or stolen phones, helping police to trace devices, while keeping counterfeits out of the black market.