I was recently struck by a set of data — the 10-year Japanese government bond yield has already reached about 1.96%, just a step away from 2%. This is a rare high level not seen in over a decade. At first glance, it seems like a domestic issue in Japan, but in fact, it hides deep changes in the global capital landscape.

Why should we be cautious? Simply put, Japan has long served as the world's "cheap funding" vault. Yen carry trades, cross-border financing chains of major financial institutions, various overseas leverage strategies — all of these implicitly depend on Japan maintaining a low interest rate environment. If the 10-year yield truly breaks through 2%, what we face is not just fluctuations in numbers, but a re-pricing of the entire cost of capital — can carry trades still operate? How much longer can assets supported by "cheap liquidity" sustain their valuations? These are serious issues, and once the market starts to take them seriously, reactions are often not gentle.

The trigger point is now right in front of us. The industry generally considers the Bank of Japan's meeting on December 19th as a critical window. The market is already digesting the possibility of further normalization of monetary policy — rising short-term interest rates, tightening policy stance — which will directly push up long-term rates and accelerate the reallocation of global funds. In other words, this is not a "certain explosion," but rather the most likely window for the market to start seriously pricing risk.

A chain reaction has already emerged. The retreat of hedge positions, the unwinding of carry trades, are draining liquidity from risk assets, amplifying short-term volatility. Recent weeks' movements have also confirmed this: rising yields are forcing many funds to reassess their exposures, increasing the probability of global assets moving in the same direction under pressure. To sum up in one sentence: when the era of "cheap money" begins to fade, many current market equilibria will be broken.

So in the next few days, I will stay cautious. Not because I predict some catastrophic event, but because the most dangerous moments are often when most people haven't taken it seriously yet. The operational strategy around December 19th is simple — stay steady if you can, reduce if you need to. No unnecessary turbulence in the short term; prioritizing position management and risk control over any predictions. Sometimes, whether your judgment is right or not is less important; the key is not to be swept away by the market’s rhythm.