The Japanese Dilemma

Part 3/3

Welcome to the third article in the Japanese Dilemma series. This 3-part series couldn’t come at a better time, with the BoJ firmly in focus on much of Monday’s sell-off in equities and bonds being blamed on a hawkish Ueda speech. I am not sure that was entirely the reason, but Japan stands at a crossroads, both politically and monetarily. You can catch up on the first two parts below.

The third part focuses on Japan’s macro story, which is no longer a slow burn; it’s a live negotiation. On one side stands Prime Minister Sanae Takaichi, intent on revving growth with fiscal thrust and a compliant cost of money. On the other stands Kazuo Ueda, who can smell inflation’s smoke before anyone admits the stove is on. The public lines are polite; the private stakes are not.

This instalment maps the quiet tug-of-war between cabinet and central bank — how guidance is worded, how markets translate it, and why a few carefully chosen phrases can move bonds, the yen, and cross-border risk in ways that don’t stay in Japan. We look at the pressure points building beneath the surface, the telltale shifts in tone, and what “coordination” really signals when policy goals diverge.

Macro D lays out the key timelines, the scenarios that actually matter for portfolios, and the market venues most exposed if the next step surprises. If you want the playbook — not headlines, but the mechanisms — read on.