Sense of déjà vu with the 2026 equity market

Research evidence excerpt

Sense of déjà vu with the 2026 equity market

11 June 2026

All of the above are common phenomena observed in the financial markets in both 1H

2024 and 1H 2026. For this reason, it may be tempting to reference 2H 2024 when

considering the outlook for 2H 2026. However, all things eventually come to an end.

The turning point in 2024 was the US presidential candidates’ debate held on 27 June

(see our 25 July 2024 report titled Key connection between stock slide and US

election). This led to the unwinding of the aforementioned “concentrated rotation”,

which also placed significant pressure on the broader equity market.

At the very same time, with expectations for a stronger dollar (i.e., yen depreciation) Final blow by Japan’s MoF

and BoJ led to another Black rapidly fading, the Ministry of Finance and government of Japan jointly dealt the final

Monday blow in the form of yen-buying intervention and a sudden interest rate hike, wiping out

speculative yen-short positions and triggering a repeat of Black Monday (see our 1

August 2024 report titled Reasons for the sudden change in the yen exchange rate

and our 28 August 2024 report titled Japan’s Economy: Monthly Outlook September

2024; The Thunder God's right arm).

Then again, the equity market had already recovered by the end of 2024, less due toBut equity markets recovered

quickly due to unpopularity of the “Trump trade” and more because the very first common theme mentioned earlier

government bonds (equity market inflows driven by the unpopularity of government bonds) had not

disappeared.

Figure 1. US credit spreads and share price valuation

Credit spread (AAA)

(％pt) S&P500 Yield Spread (actual, RHS) (％)

S&P500 Yield Spread (Current FY forecast basis, RHS) 2.2 7.0

2 6.0

1.8 5.0

1.6 4.0

1.4 3.0

1.2 2.0

1 1.0

0.8 0.0

0.6 -1.0