Inflationary Forces Upend Decades of Deflation in Japan, Prompting Investors to Rethink Stocks and Bonds
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Global inflationary forces are changing how investors view Japan's economy, ending decades of falling prices. This is forcing a shift to focus more on interest rates, dividends, and consumer spending.
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Japanese stocks have rallied to around their highest since 1990, with consumer and financial stocks outperforming. But inflation creates challenges for Japanese bonds.
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Investors who previously focused on Japan's aging population are now looking more at banks and other stocks expected to benefit from higher rates.
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There are positive signs like higher wages and dividends that could support more consumer spending if inflation persists.
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After years of BOJ support, bonds may suffer as inflation reduces their appeal and prompts a policy shift. Yields have room to rise.