[China Merchants Bank States Yen Carry Trade Reversal Will Suppress Global Asset Liquidity in the Long Term] China Merchants Bank released a research report indicating that the Bank of Japan raised interest rates by 25bp on December 19, increasing the policy rate to 0.75%. The reversal of yen liquidity and the Japanese bond market will exert pressure on global financial conditions. As of the end of 2024, approximately $9 trillion in positions still rely on low-interest yen as a source of liquidity, and this portion of liquidity may steadily contract as the U.S.-Japan interest rate differential narrows. Additionally, the fiscal expansion stance of the Sanae Takaichi government may trigger market concerns, leading to further fermentation of Japanese bond risks and a steep upward movement in medium- and long-term yields.