THE NEXT GLOBAL MARKET SELLOFF COULD START BECAUSE OF JAPAN.

Bank of Japan officials just said they're ready to hike rates sooner than expected, according to Bloomberg.

The reason: the yen keeps falling, and that's pushing inflation risk higher.

The yen just hit its weakest level in 40 years. Right after that, the government warned it might step in.

The next hike was expected in December, six months after June's rate hike.

But officials say they don't have to wait that long. They can hike sooner if needed.

The market is already pricing a rate hike sooner than expected. Traders are pricing in a 72% chance of another hike by October, two months earlier than the usual timeline.

There's another reason for this. Companies are raising prices faster than before, and a weak yen gives them even more reason to keep doing that.

Inflation is now close to the BOJ's 2% target for the first time in 13 years.

A single BOJ rate hike in August 2024 was enough to trigger a massive global stock selloff.

That's because trillions of dollars sit in the yen carry trade, where investors borrow cheap yen and use it to buy higher yielding assets abroad.

Now imagine what a faster, unexpected round of hikes could do.

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