The 2-year Japanese government bond yield has reached its highest level since 2011, hitting 0.176%. This increase comes amidst remarks from Rie Nishihara, chief Japan equity strategist at JPMorgan, who believes that the recent bull market in Japan marks the “end of deflation.”
Nishihara’s comments were made in light of Japan’s latest inflation data, which showed the core consumer price index falling to 2% from 2.3%, higher than the expected 1.8%. The Nikkei closed at 39,239 points, a slight change from previous levels, with the index having gained 43% over the past year. Additionally, the yen rose by 0.3% to 150.22 yen per dollar.
Nishihara highlighted that the end of deflation became a prominent theme in the market after Japan’s core CPI hit 2% in April 2022. The Bank of Japan’s decision to revise its yield curve control policy in December 2022 also played a role, leading to a bottoming out of Japanese stocks in January 2023.
Looking ahead, Nishihara believes that the Nikkei has the potential to reach a sustainable level of 40,000, with a focus on the Topix index. However, for the Topix to surpass its bubble high from 1989, the rally in Japanese stocks needs to extend beyond semiconductor stocks.
The Topix index closed up by 0.2% at 2,678.46 points, indicating a positive sentiment in the Japanese market. The overall outlook for Japanese stocks remains optimistic, with potential for further growth in the coming months.
This article is a translated version of a report from MarketWatch, an independent entity from Dow Jones Newswires and The Wall Street Journal.