Bottom-line: End of YCC, along with higher global rates, has led the 10Y JGB to break 1% rates. Until the Fed cuts, higher Yen rates and a steeper JGB curve may restrict buying of US bonds...
In this piece we compare and contrast macro to market dynamics between the US and Japan, including:
- Demographics: Japan has been experiencing a rapid aging of its population; the US is also aging but at a slower pace, resulting in divergent GDP paths
- Fiscal Comparison: Debt sustainability has been a concern for many developed nations (like the US & Japan) especially with elevated deficit spending
- Money & Banking: Real policy rates between the US and Japan are also at historical extremes meanwhile central bank's policy are likely diverging now
- Markets: US stock market cap to GDP ratio has spiked to a new high (and well beyond the 90s Japan experience) we also compare US vs Japan fixed income
Please download the PDF (see above in the banner) for the full presentation...
