Japan (3rd largest economy) influences global markets through its unique monetary policy position and the yen carry trade. Key mechanisms: (1) BOJ rate decisions — any shift from ultra-loose policy (even 10bp hike) causes global shockwaves. The July 2024 rate hike triggered a 12% Nikkei crash and yen carry trade unwinding that rippled through global equities. (2) Yield Curve Control (YCC) adjustments — widening the 10-year JGB yield band weakens yen carry trades, strengthening JPY and pressuring global risk assets. (3) Tankan survey (quarterly) — the large manufacturing DI is Japan's most important business sentiment gauge. Below 0 = pessimism. Strongly correlates with Nikkei 225 direction. (4) JPY/USD moves — yen weakening beyond 150 signals potential MOF intervention. Rapid yen strengthening (5%+ in days) triggers forced unwinding of carry trades, causing global equity selloffs. (5) Core CPI (ex fresh food) — BOJ targets 2% sustainably. Persistent above-target readings support rate normalization expectations.