Japan

Interest rate volatility is very low across developed market fixed income. Investors should maximize the carry in their portfolios to outperform in a low rate vol environment.

For this screener report, we explore opportunities in laggards with earnings momentum, Japanese semiconductors and US rate-sensitive stocks.

We spent last week meeting investors in Switzerland. This Strategy Insight revisits the most prominent topics we discussed, including repatriation fears, SNB intervention, and Dutch pension reform.

The yen carry trade will unwind this year. However, it will be triggered by a drop in “carry asset” prices and a spike in the JPY/USD, rather than by Japan’s improving interest rate differentials. Go long JPY against the USD.

Ignore Japan's constitutional debate. Rearmament will accelerate anyway. Tech, defense stocks, and industrials will benefit. The threat to JGBs is real but will probably be contained.