Japan

Yen bulls need patience. The near-term narrative remains bearish on the back of interest-rate differentials. Longer term, it is the most attractive currency the G10, on valuation grounds.

Yen bulls need patience. The near-term narrative remains bearish on the back of interest-rate differentials. Longer term, it is the most attractive currency the G10, on valuation grounds.

No, the secular rise in geopolitical risk has not peaked. EU-China trade ties underscore the multipolar context, but this multipolarity is unbalanced, as the US has not reached a new equilibrium with its rivals. While the second quarter is murky, investors should stay defensive this year on the whole.

In this <i>Special Report</i>, BCA Strategist Ritika Mankar highlights that Japanese savers own foreign assets to the tune of a staggering $6.5 trillion today. As implausible as it may seem today, the rate cycle in Japan will turn later this decade. Once it does, Japanese savers will sell down their global assets – a dynamic that is likely to kick up a storm.

High rates have hurt real estate and, now, banks. The next shoes to drop: Loan growth, profits, and employment. Stay defensive. Recession is probable, but risk assets have not priced it in.