Global asset prices at risk from higher Japanese rates

In this Focus we argue that monetary tightening in Japan is a potential trigger for a sharp correction in bond markets and other asset prices in the West. The Bank of Japan (BoJ) is likely to start to reverse its ultra-accommodative policy shortly, probably in April. The initial impact on Japanese interest rates, which are currently zero, might be marginal. However, even a small shift might have a disproportionate impact on global markets.