Inflation Concerns Driven Treasury Yields to Surge, Negative Impact on Stocks

投稿日: 投稿者: タダシ

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Oil prices have already risen 86% since the beginning of the year. Wheat prices rose approximately 6% this week, a 27% increase compared to the end of last year.

While existing home sales figures released this week in the US fell short of market expectations, consumer price indices and producer price indices were higher than anticipated. This led to increased expectations of interest rate hikes, a sharp rise in Treasury yields, and a sell-off in stocks.

 

The interest rate spread between 10-year and 2-year US Treasury bonds has steepened, fueling concerns about inflation.

 

The rise in US Treasury yields is spreading to countries in Europe and the US. Inflation concerns are rising worldwide.

In Japan, Nisshin Flour Milling Welna has announced price increases for 212 products, including pasta, which is likely to exacerbate inflation.

 

In Japan, the 10-year government bond yield is at 2.7%, approaching 3%. Japan’s problem is that wage income growth is not keeping pace with the inflation rate. The labor share of income for small and medium-sized enterprises (SMEs) is nearing its limit, making income growth unlikely. Japan is likely to be hit by stagflation.

 

To protect household finances, investment should shift from cash deposits to stocks. Investing in stocks of companies that outperform inflation can yield returns exceeding inflation. This means buying undervalued shares of companies with strong earnings. Overvalued stocks will eventually see a correction.

 

Of the 1645 stocks in the TOPIX index, 584 have a PBR below 1. Many of these stocks are promising.

Kioxia Holdings (285A) announced strong earnings. In after-hours trading, it rose 7000 yen to 51450 yen.

 

The question is whether this trend will continue on Monday. Interest rates are likely to rise again next week, negatively impacting the stock market.

 

Can Kioxia become the savior of Japanese stocks?

 

Due to inflation concerns, the stock market is likely to see a shift in funds from companies with high debt ratios and small-cap stocks to defensive stocks. The trend in the stock market is likely to change.

 

〇Caterpillar-Komatsu Ratio

Caterpillar’s market capitalization is 64.93 trillion yen, 10.76 times that of Komatsu (6.03 trillion yen). The gap is only widening.

〇India

In addition to inflation concerns, India’s trade deficit is widening. The Indian rupee has hit a record low.

The stock market is falling. India is an importer of crude oil. High oil prices are hurting the Indian economy.

Data: Bloomberg

Certified International Investment Analyst (CIIA)

Certified Securities Analysts Association (CMA)

AFP

Tadashi Fujii

投稿者プロフィール

タダシ
大学時代から株式投資をはじめ、証券会社のトレーダーとなる。以後、30年
金融畑一筋。専門分野は債券、クレジット。
日本証券アナリスト協会検定会員（CMA）、国際公認投資アナリスト（CIIA)

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