The Bank of Japan raised its policy interest rate by 25 basis points to 0.75% with a 9-0 vote, creating a new high in thirty years. This decision has dropped a bombshell in the global financial markets.

The seemingly simple action of raising interest rates is actually shaking the logic of global capital flows. Japanese retail investors—especially "Mrs. Watanabe," who control nearly one-third of Japan's retail forex trading volume—have already sensed the risk signals. On social media and online forums, investors are beginning to discuss the possibility of a depreciation of the dollar, and voices about a market crisis are quickly fermenting. Data shows that they are massively reducing positions in a capital game that has lasted for decades.

This game is called "Yen Carry Trade". The logic is actually not complicated: investors borrow yen at near-zero cost, exchange it for dollars, and then invest in high-yield assets such as U.S. stocks and bonds to consistently obtain interest rate differential gains. Over the past decade, a significant portion of the enormous liquidity in the global market has come from this invisible funding channel.

The situation has changed. The Bank of Japan's interest rate hike has directly raised the cost of borrowing in yen, shaking the foundation of this arbitrage model. The latest report from the U.S. Commodity Futures Trading Commission shows that net speculative positions in yen have sharply declined by more than 60% in the two weeks prior to the central bank's announcement. What does this mean? Capital on the scale of trillions is making new choices.

On the surface, it appears to be the impact of interest rate hikes, but at a deeper level, it is the structural dilemma faced by the global traditional financial system – when the source of large-scale cheap liquidity is cut off, the long-hidden risks of asset allocation will gradually come to light. The changes in this wave of capital flow are just beginning to show their impact on the global investment market.