The Bank of Japan could end up stealing Janet Yellen’s thunder on Wednesday.

While shifting expectations for the two-day meeting of Federal Reserve’s rate-setting committee that ends on Sept. 21 has remained the primary driver for U.S. financial markets, it’s the news that will come out of Tokyo a few hours earlier that could be equally, if not more, important to asset prices.

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Financial markets are in a “dangerous place” right now, “jammed between the BOJ and the [Federal Open Market Committee],” said Ward McCarthy, chief financial economist at Jefferies, in a Friday note.

Ever-shifting expectations of the timing of a Fed rate increase are driving yields at the short end of the global bond market, he said, while the long end is being driven by expectations about the Bank of Japan and prospects for global quantitative easing measures—the extra credit market juice from bond-buying that major economies have employed during the slowly mending years since the Great Recession.

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A sharp drop in prices of longer-dated bonds, which pushed yields higher on Sept. 9, was blamed in part for a sharp selloff in stocks SPX, +1.05% that same day. The global bond selloff was blamed largely on fears the European Central Bank and the Bank of Japan will eventually run out of bonds to buy.

A similar dynamic was at work on Sept. 13, feeding investor worries that a sharp rise in long-dated bond yields could be the catalyst for near-term losses in stocks.

While stocks usually gain when bond yields rise, that relationship has broken down in recent weeks.

See:Why stocks and bond yields aren’t moving in tandem

There are several reasons why McCarthy and other central bank watchers are focused on the Bank of Japan.

The BOJ remains the most aggressive major central bank when it comes to quantitative easing—its program of bond and other asset purchases as well as negative interest rates that are designed to reflate Japan’s stubbornly moribund economy.

But there’s an increasing sense that aggressive QE by the Bank of Japan and other major central banks, including the European Central Bank, are producing, at best, diminishing returns.

Critics charge that negative interest rates and extremely flat yield curves—the differential between yields on short- and longer-dated government bond maturities—are doing more harm than good. They fear that ultralow and negative rates spook consumers and businesses into hoarding cash rather than to spend or invest it. Low rates and flat curves make life difficult for pension managers hoping to collect dependable yield, and they threaten the business model for banks and life insurers.

Negative rates have failed to weaken the Japanese yen USDJPY, +0.21% EURJPY, +0.00% as might be expected. A weaker currency, which makes Japanese exports more competitive on the global market, is seen as an important pathway for transmitting monetary stimulus to the economy. In the year to date, the yen is up nearly 18% versus the dollar and 15% versus the euro.

Bank of Japan Gov. Haruhiko Kuroda in July surprised investors by ordering a “comprehensive review” of the central bank’s policy measures—a move some, but not all, economists viewed as a sign doubts were emerging over the effectiveness of QE. That review is due ahead of the Sept. 20-21 policy meeting.

News reports paint a picture of a Bank of Japan board that remains solidly in favor of maintaining an ultra-easy monetary policy, but is sharply divided over the best way to proceed as the country’s banking sector feels the pinch of low rates and a flat yield curve.

Ideas the Bank of Japan could ultimately move to adjust its program in a way designed to further steepen the yield curve are behind recent market moves, analysts said, and could pave the way for further steepening of yield curves around the world, including U.S. Treasurys.

Speculation has mounted that the Bank of Japan could undertake an “inverse twist,” shifting its bond purchases away from the longer end of the yield curve. That would be a mirror image of a Federal Reserve maneuver dubbed “Operation Twist” that the central bank used in 1961 and 2011 to flatten the yield curve by buying long-term debt and selling short term debt. Bond yields move inversely to prices.

There are other measures the Bank of Japan could take to try to steepen the yield curve, including simply changing the mix of maturities it buys or setting a yield target.

Christoph Rieger, head of rates and credit research at Frankfurt-based Commerzbank, urged against undertaking an inverse twist, noting that Kuroda has expressed concerns that a “bear steepening” of the yield curve—a phenomenon in which long-term rates rise faster than short term rates—tends to tighten monetary conditions. Obviously, that would blunt the impact of the BOJ’s easing efforts and prove unwelcome in an economy that’s contracting.

As Standard Bank’s Steve Barrow previously noted, there is fear that selling pressure at the long end of the Japanese bond market snowballs. The resulting jump in yields could spook investors in other assets, including equities and U.S. Treasurys.

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While that may have contributed to recent weakness in government bonds and stocks, Barrow and many other analysts are skeptical that a sustained bond market rout is in the cards.

But there is room for the Bank of Japan to give Yellen and her fellow policy makers something else to talk about when they get together for the final leg of the Fed’s policy-making meeting on Wednesday.

“The BoJ is potentially the more important market-moving event despite a history of under-delivering on expectations,” wrote McCarthy at Jefferies. “Were the BOJ to break with history and deliver on backing away from QE to foster a steeper curve, the bear steepener will resume in the Treasury market.”