Last week's rate hike now presents a real problem for the BoJ and raises potentially more questions than answers. Has anything really changed or is this just a “pivot” in name only? The markets seem to think it’s the latter. This leaves me with two big questions - 1) why did the Bank of Japan come in so gentle with its first policy change and 2) why did the Fed follow it up with a surprisingly dovish stance of its own?

I probably don’t need to tell you that much of the U.S. equity market’s return since the beginning of 2023 have been driven by just a handful of stocks. If you’re banking on these types of returns continuing, you should probably adjust your expectations now. In fact, it’s probably a good time to reassess your portfolio allocation altogether.

It appears that the BoJ is satisfied with the economy’s progress on inflation, wage growth and GDP that it can finally begin normalizing monetary policy. This recent move higher for the yen could be just the tip of the iceberg. The important question of how the yen could impact equity prices - turns out it could be a lot.