The watch dashboard
The book argues Japan can hold only two of three goals — cheap debt service, a defended yen, normalized rates — and that the choice of which to sacrifice is legible in a handful of readings. These are those readings.
USD / JPY
—
10-year JGB yield
—%
BOJ policy rate
1.00%
Japan core CPI, y/y
1.8%
Nikkei 225
—
Gold, $/oz (COMEX)
—
Fed − BOJ policy spread
2.63pts
Japan gross debt
205% GDP
Market series: end-of-day closes, refreshed every 15 minutes. Policy and CPI readings are updated by hand after each release.
Reading the tape
Each row is an indicator; each column is the road it would point to. Track the yen's level and the Bank's hike path against inflation above all — fiscal stance is the swing that turns a given combination into A, B, or C.
| Indicator | Case A · consolidation | Case B · debasement | Case C · fiscal dominance |
|---|---|---|---|
| USD/JPY, post-intervention | Stabilizes or strengthens on credible discipline | Grinds weaker, ¥170+ | Defended by intervention, not rates; capital-flow measures appear |
| BOJ hike path vs. CPI | Hikes keep pace with or lead inflation | Hikes persistently lag inflation | Hikes halted or reversed despite an above-target print |
| 10Y JGB yield & term premium | Compresses on restored credibility | Elevated but orderly | Disorderly spike — or any new yield cap or purchase guidance |
| Fiscal stance | Primary-balance target restored; supplementary budgets shrink | Supplementary budgets stay large; debt-ratio metric retained | Spending sustained and the BOJ made to fund it |
| BOJ–government relations | Independent, cooperative | Quietly accommodative | Open friction; pressure on independence |
| Intervention frequency | Interventions cease | Periodic, with diminishing effect | Heavy, sustained, backstop-dependent (Fed FIMA repo) |
| Long-JGB demand | Healthy | Soft but functioning | Buyers' strike; failed auctions |
| Real wages vs. CPI | Positive — relieves pressure | Negative — sustains the squeeze | Sharply negative — a political forcing event |
Reading the live feed against the matrix…
Current reading — Case B, unbroken. The Bank has hiked to 1% and stopped; core CPI is running just below target while the yen sits near ¥159.75 after the largest yen-buying operation Japan has ever recorded — ¥15.4tn, about $96.5bn, published by the Ministry of Finance on 28 August — which markets unwound within weeks. Fiscal policy stays expansionary and unanchored. That combination — spending sustained, hikes cautious, the currency absorbing the strain — is the base case doing exactly what the book expects of it. The tell that would move the reading to Case C is not a weaker yen; it is any re-imposition of yield caps or purchase guidance in the JGB market.