Japan's 10-year government bond yield has surged to 1.85%, marking its highest level since 2008. This development indicates a significant shift in global liquidity dynamics, as analysts warn that rising Japanese yields could divert capital from U.S. Treasuries, risk assets, and cryptocurrencies. The Bank of Japan's move towards rate normalization is a key factor in this shift. The yen, traditionally a stable funding currency, is now influencing markets significantly, with Japanese institutions holding $1.1 trillion in U.S. Treasuries reconsidering their overseas investments. This change is occurring amid Japan's persistent inflation above 2% and a ¥21.3 trillion stimulus package, which are contributing to higher long-term yields. Analyst Shanaka Anslem Perera highlighted that Japan's diminishing role as a global liquidity anchor could have widespread implications for the post-2008 financial system.