Investment Insights

 

BOJ stands pat on policy but paves way for future rate hikes

The Bank of Japan kept interest rates steady as expected while upping its CPI forecast, paving the way for future rate hikes. Any further hawkish stance by the BOJ may depend on the persistence of positive real wages and inflation's impact on consumer purchasing power.
Inflation uncertainty seems increasingly entrenched, which is less kind to developed market sovereign bonds. The US fiscal deficit is very large, and the Federal Reserve (Fed) is now in the challenging position of deciding when to cut rates. Energy remains a good hedge in this environment, and gold is increasingly being recognised as a store of value.
The Chinese economy and its equity market continue to be significant focal points in broader Asia. Additional support measures, combined with a recalibration of market expectations, have helped Chinese equities recover from the panic selling witnessed towards the end of 2023 and into January. As a result, fundamental strengths are being recognised in certain areas.
We maintain a positive outlook for Asian local government bonds, particularly those from India, Indonesia and the Philippines. In our view, the disinflation trends in these countries should provide their central banks with the flexibility to shift towards rate cuts later in the year.

Of volcanic activity and Asian fixed income markets

We highlight the importance of making decisions based on probabilities and the best expected outcomes, assessing relevant information and acting ahead in constantly changing market conditions.

Navigating Japan Equities: Monthly Insights From Tokyo (April 2024)

The Bank of Japan (BOJ) lifted interest rates for the first time in 17 years in March, making a historic departure from negative interest rates. We provide an overall evaluation of its decision, discuss how long accommodative monetary conditions could still last, analyse the yen’s potential policy impact and assess the BOJ’s options after halting ETF purchases.

Global Investment Committee’s outlook: stronger for longer

The Global Investment Committee sees robust corporate earnings, firm employment and expectations for rate cuts keeping markets more buoyant than anticipated by average consensus estimates.

Future Quality Insights: healthcare offers diversification from market hot spots

We remain very strong supporters of the healthcare sector. In addition to the well-known demographic drivers, innovation is enabling structural changes in healthcare delivery and in our view these changes will confer years of strong organic growth opportunities if we choose the right companies.
Japanese households, long under-invested in financial markets, are expected to play a significant part in the country’s “virtuous circle” of reflation as they seek returns capable of keeping up with inflation.

Trump vs. Biden II: what implications could the US election have for sustainable fixed income?

The stage is now set for a Biden versus Trump rematch in November. So, what does this mean for sustainable bonds?