“Japan has always been a country to follow carefully in the world of finance, because it has often been an indicator of future global economic and financial tendencies. From the speculative bubble and the consequent stagnation of the 90s, to the experimentation of extraordinary monetary policies of the early 2000s, the country has always been an indicator of new trends. Even in the case of the rise in post-covid rates, it can be said that, for example, for example, for example, the thirty years of Japanese anticipated the movement of the American homologous and the thirty -year rate of the major developed countries.. This is what Stefano Fiorini, Global Fixed Income Fund Manager of Generali Asset Management says.
Is the performance of over 3% palatable for an international investor?
“The answer, in our opinion, – notes Fiorini – is negative as the monetary policy of the Central Bank is very shy in defending the interests of the holders of long -term bonds. In the face of an inflation above 3% at national level, the central bank is maintaining reference rates to 0.50%, with the aim of definitively out of years of deflation. This policy is at the expense of the holders of bonds, who have seen them in the last 5 years. Investments lose value, while the local stock market benefits above all “.
The goal of the Japanese authorities
“The goal of the Japanese authorities is clear: to get out of the long period of deflation and at the same time – explains Fiorini – reduce the weight of the government debt. The central bank – underlines Fiorini – already holds about 50% of the debt stock, bringing real losses in the state budget and while preserving the private sector as much as possible. Another victim of this policy was the Yen, today at the minimum against the euro and strongly underestimated on many Fair metrics Value “.
The solution to the problem of the Mole of Japanese public debt
“The solution to the problem of the Mole of Japanese public debt – continues Fiorini – could be used by other countries in the near future to lower government debt metrics compared to GDP. Everything – underlines – suggests that inflation becomes a constant presence in the next few years and this can become a global phenomenon. The increase in long -term rates naturally has the potential to be a disturbing element for financial markets in the near future. It will have repercussions both on the performance of the different financial assets and on the political realities of individual countries.
Long -term Japanese rates at 4 or 5%?
“To hypothesize long -term Japanese rates at 4 or 5% has repercussions for other bond markets, as Japan has been one of the major capital exporters in recent decades, accumulating many foreign assets, including US Treasuries and European government bonds. These assets – concludes Fiorini – could be disinved if it was decided to impose legislations to oblige local institutional investors To buy Japanese bonds in an attempt to reduce rates of rates.
