Institutional scenario analysis of BOJ normalization, JGB repricing, and Yen Carry Unwind risk. The memo tests whether Japan’s rate and FX adjustment remains orderly or begins transmitting through funding, collateral, leverage, and global liquidity, with the governed posture at PREPARE.

Major markets still price a macro-financial regime capable of absorbing slower growth, elevated real rates, and policy divergence without broad stress. That assumption remains intact, but its margin of safety is narrowing. The regime is STRAINED, not transitioning, with rising transition risk, high regional dispersion, and growing sensitivity to refinancing, nonbank intermediation, funding, and liquidity conditions.