Much of the price action in some stocks and other assets recently has been based on the expected Japan 75 bps rate hike tonight at 10 PM ET. This is why many risk-on assets have been hit pretty hard - or so that's the narrative I'm hearing off X and other places on Reddit.
What if this is only the first rate hike? Everyone says the market has now priced in a 75 bps rate hike - this would get Japan's yield to 1.25%. However, this is well below the US overnight fed rate of 3.5 to 3.75%.
What would happen to the US stock market and other assets if Japan were to implement a series of 25 to 75 bps rate hikes over the next 2-3 years, bringing their interest rates to 3.5% to match what the current perceived "neutral" rate is?