BOJ wage data and rate-hike expectations set to steer global markets

Global markets on Monday are likely to focus on shifting expectations for central bank policy, with particular attention on Japan and how its decisions could ripple through currencies, bond yields, and equity sentiment worldwide. The key driver is the outcome of Japan’s annual Shunto wage negotiations, which are feeding into expectations for a potential Bank of Japan (BOJ) interest rate hike in March. Early indications suggest wage increases around 5% overall, with base pay growth near 3.4%. If these figures are confirmed or come in stronger, investors will see it as a sign that Japan may finally be exiting its ultra‑loose monetary policy. That would raise the odds of the BOJ lifting rates for the first time in years. For global markets, a more hawkish BOJ matters in several ways. First, it could strengthen the Japanese yen against the US dollar and other major currencies, affecting global currency markets and funding conditions for investors who have long used the yen as a cheap funding currency. Second, higher Japanese yields could draw some capital away from foreign bonds and equities back into Japan, putting mild upward pressure on global bond yields and potentially weighing on more rate‑sensitive parts of the stock market. Third, a BOJ shift would reinforce the broader narrative that the era of ultra‑easy money worldwide is ending, keeping investors focused on interest‑rate paths across the US, Europe, and Asia. Because there are relatively few major, date‑specific macro releases scheduled for Monday itself, trading is likely to be driven by how investors reposition ahead of the BOJ’s March decision and in response to incoming wage data from Japan. Markets may see increased volatility in currencies and government bonds, with equity investors watching for signs of rotation between regions and sectors as global monetary policy gradually normalizes.