Japan’s 10-year yield hit 3% for the first time since 1996 as USD/JPY returned near 160. The old U.S.-Japan yield-spread anchor has weakened; Japan’s own curve, fiscal risk, and the BOJ-Fed rate-hike setup are now what matter for September.
June CPI reduced near-term Fed hike fears, but Treasury financing, oil prices, AI capital spending, the dollar and the midterm elections still shape the second-half market outlook.
Bank of America’s July 2026 Flow Show points to Japanese bank stocks as a possible early warning for global markets. The signal matters only when bond yields, capital flows, the yen, credit and U.S. market breadth begin deteriorating together.
The U.S. is rebuilding dollar credibility through strong-dollar policy, Treasury demand, Fed uncertainty, stablecoins, AI infrastructure, and gold reserves.
What broke on June 5 was not AI valuation, but the market’s faith in endless Quantitative Easing
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