〔Day Digest〕BoJ Delivers 25bp to 1.25% (Highest Since '95) Yet Yen Sinks 2%+ Into Three-Day Holiday; JGB 30Y at 4.18%, France Debt to 121.7% as Six Central Banks Test the Rout

0. Weekly Arc

The four-bank "super two weeks" closed with the BoJ delivering 25bp to 1.25% — its highest policy rate since 1995 — by a 7-2 vote that preserved the June split (when Governor Kazuo Ueda was absent and the count was 7-1) ^[1]. Yet markets read the decision as a letdown: the yen fell more than 2% on the week as Ueda offered almost no forward guidance, with JPMorgan flagging a hawkish "phase shift" subtext that the tape did not price ^[2][3][4]. The accompanying bond selloff pushed the 10-year JGB above 3% and the 30-year to 4.18% as of September 1, both 21st-century highs ^[1]. France's debt-to-GDP trajectory — 119.3% projected for 2026 and 121.7% for 2027 — kept euro-area sovereign pressure live ^[5]. Next week's catalysts: US and euro area September PMIs, plus rate decisions across six economies ^[6].

1. BoJ Hike and the Yen Gap

• **[NEW] 25bp to 1.25%, 7-2 vote:** the BoJ lifted the policy rate to its highest since 1995, a level the bank's own materials place inside the 1.1%-2.5% nominal neutral range ^[1]. Two dissents continued the June fracture ^[1].
• **[ESCALATED] Hawkish subtext ignored:** JPMorgan argues Ueda's "phase shift" language leaves large and consecutive hikes possible, yet the yen still dropped 2%+ on the week ^[2][3]. August corporate goods prices ran +7.6% y/y, yen-denominated imports +24.8% y/y, and core CPI ex-fresh food +1.7% y/y — the price backdrop the BoJ cited ^[1]. The 2026 Shunto wage round averaged +5.01%, a third consecutive year above 5% ^[1].
• **[NEW] Holiday liquidity risk:** Japan faces a three-day holiday next week; Bloomberg and Jinshi flag that thin trading will amplify any official intervention shock ^[3][4].

2. Sovereign and Fiscal Pressures

• **[NEW] France debt trajectory:** the economy ministry projects public debt at 119.3% of GDP in 2026 and 121.7% in 2027, against 117.5% at end-Q1 2026 (€3.5361 trillion) — a level placing France behind only Greece and Italy in the euro area ^[5].
• **[ESCALATED] JGB curve stress:** the 10-year above 3% and 30-year at 4.18% as of September 1, both 21st-century highs ^[1]. FY2026 interest costs exceed ¥30 trillion (about a quarter of the budget) and are projected at ¥36.6 trillion in FY2027 ^[1].
• **[ONGOING] Demographics:** Japan's 65+ population hit 36.24 million, or 29.6% of the total, a record; the 80+ cohort reached 12.88 million — a structural backdrop to the BoJ's rates-versus-fiscal bind ^[7].

3. Germany: H1 Lift, H2 Soft

• **[NEW] DIW upgrade:** the German economic institute lifted 2026 growth to 1.2% from 0.4% on a strong H1, but warned H2 momentum will slow as export tax preferences lapse, energy costs curb consumption, and the government-investment-driven construction downturn persists; 2027 growth is forecast just below 1% ^[8]. Risks cited: the Russia-Ukraine war, Middle East tensions, trade frictions, and low European river levels ^[8].

4. The Week Ahead

• **[NEW] PMIs as the test:** September manufacturing and services PMI prints for the US and Europe land on Wednesday — the cleanest read on post-hike resilience and the basis for any second-guessing of the Fed's 25bp move to 3.75%-4.00% ^[6].
• **[NEW] Six central bank decisions:** Swiss National Bank, Riksbank, Norges Bank, Banco de México, South African Reserve Bank, and Bank Indonesia all meet; whether any follows the BoJ/Fed tightening is the open question, and hawkish follow-through would extend this week's global bond selloff ^[6].
• **[NEW] Officials on the tape:** investors also await fresh remarks from Fed, ECB, and BoE officials ^[6].
• **[ONGOING] Housing/rates cross-current:** the Economist flags that supports which shored up housing during the last rate-rising cycle are now gone — a generalized warning framing the BoJ/Fed transmission test ahead ^[9].

5. Sidebar and Source Notes

• **[NEW] OECD real-income snapshot:** Switzerland led 2025 monthly post-tax income at $8,282, followed by Iceland (gap of $2,400+), with the US at $4,638 (sixth), Korea at $2,776, and Japan at $2,458 ^[10].
• **[NEW] Hong Kong (background — China-macro):** Finance Secretary Paul Chan pledged to expand the dim sum bond market and develop RMB-denominated gold and commodity pricing, citing offshore RMB loans at a record ¥935 billion last year and an RMB business facility quota expanded to ¥500 billion ^[11].
• **[NEW] Oman:** August CPI fell 0.19% m/m, a single-line print that tracks the GCC disinflation backdrop ^[12].
• **Source quality:** the yen-vulnerability call is multi-source (Jinshi, Bloomberg) ^[3][4]; the hawkish-subtext read is a single house view (JPMorgan) ^[2]. DIW's Germany upgrade and H2 caveat sit in the same release, so they are not independent corroborations ^[8]. France debt projections are ministry-issued, not market-priced; the OAT spread response is not in the packet ^[5]. The Economist housing piece carries no country-specific figures and should be read as a framing prompt, not a data point ^[9].