? As of October 4 (2026)? “The Bank of Japan raised rates, so 10-year government bond yields must rise too.” If you assume this, you will misread market reactions. This is because policy rates and long-term interest rates look at different time horizons.? Policy rates are the benchmark for “overnight money”The Bank of Japan and the FRB guide the interest rates in the market where banks lend money to each other overnight. What central banks decide is a target, and actual transaction rates are determined in the market. They do not directly set all deposit and loan interest rates.In the latest official decisions, the Bank of Japan is guiding the uncollateralized overnight call rate to around 1.25%, and the FRB is guiding the federal funds rate to 3.75–4.00%. [1][2]? Long-term interest rates reflect “the future and risk”? A representative example is the 10-year government bond yield. Government bond prices change based on investor buying and selling; if prices rise, yields fall. The coupon rate at issuance and the market yield are different things.Long-term interest rates can be thought of roughly as “the expected average of future short-term rates + a premium for holding them for a long time.” [5] They are related to price and economic outlooks, government bond supply, investor demand, and central bank purchases.? Moving in the opposite direction of rate hikes and cuts? If a rate hike is trusted to mean “inflation will subside and rates can be cut in the future,” long-term interest rates may fall. Conversely, even with a rate cut, if concerns about future inflation or an increase in government bond supply intensify, long-term interest rates can rise. This is an example showing conditions, not a current forecast for Japan or the US.The market prices things in before the announcement. What you should look at is not just the “direction,” but whether it is “stronger or weaker than expected.”? How do Japan and the US differ??? The Bank of Japan focuses on price stability while also examining the wage-price cycle and the impact of government bond purchases. ?? The FRB makes decisions based on price stability and maximum employment. Long-term interest rates in both countries are formed in the market and are also influenced by central bank policies and purchases. [1][2][6]The 10-year rates on October 1 were 3.092% for Japan and 5.24% for the US. [3][4] Because currency, economic outlooks, and supply-demand dynamics differ, investment advantages and currency directions are not determined by interest rate differentials alone.? I look at three things: “current policy rates,” “future policy expectations,” and “supply and demand for long-term bonds.” I want to think about the reasons why long-term interest rates moved by separating them.? Policy decisions: Japan decided 9/18, applied 9/24; US decided 9/16, applied 9/17. Government bond yields are for the common observation date of 10/1. The latest US figure for 10/2 is 5.28%. Japan uses semi-annual compounding final yield, while the US uses par yield; calculation methods and observation times differ.Sources[1] Bank of Japan September 18 Statementhttps://www.boj.or.jp/mopo/mpmdeci/mpr_2026/k260918a.pdf[2] FRB September 16 Statement and Implementation Notehttps://www.federalreserve.gov/newsevents/pressreleases/monetary20260916a.htmhttps://www.federalreserve.gov/newsevents/pressreleases/monetary20260916a1.htm[3] Ministry of Finance Japan – Government Bond Interest Rate CSVhttps://www.mof.go.jp/jgbs/reference/interest_rate/jgbcm.csv[4] US Treasury – Daily Treasury Par Yield Curvehttps://home.treasury.gov/resource-center/data-chart-center/interest-rates/TextView?type=daily_treasury_yield_curve&field_tdr_date_value=2026[5] FRB – Decomposition of Long-Term Interest Rateshttps://www.federalreserve.gov/data/three-factor-nominal-term-structure-model.htm[6] Bank of Japan – Government Bond Purchases and Long-Term Interest Rates (9/2 Speech)https://www.boj.or.jp/about/press/koen_2026/ko260902a.htm??????????? I post my “Day Trading Strategy for Tomorrow” every night on XI share featured stocks and the price levels I am watching before the market opens the next morning.? https://x.com/mario_takashi_0??????????#InterestRates #BOJ #FRB #JapaneseStocks #USStocks
