According to CoinMeta, smbc Nihon Securities strategist Ataru Okumura stated that as strong U.S. inflation data boosts expectations for the Federal Reserve to raise interest rates, the Bank of Japan may have to follow suit in order to prevent a weakening of the yen and rising bond yields. He warned that if the Federal Reserve tightens policy without taking into account stricter AI rules, there is a risk of triggering a sharp economic slowdown. The Japanese government bond market is facing a tug-of-war: on one hand, there are concerns that the Bank of Japan is falling behind in addressing inflation, and on the other hand, as market attention switches between these two risks, bond yields could experience significant fluctuations as a hedge against an economic downturn.