Feedback from US Investor Meetings

研报英文原文证据摘录

Feedback from US Investor Meetings

UpdateMincreases in long-term yields could become a risk factor for the broader equity

market.

Some investors asked about current household consumption trends, the outlook for

inflation and real wages, the possibility of a consumption tax cut, the consumption

behavior of younger generations, and wealth effects. These discussions suggested

growing interest in the consumer sector among some investors. Topics such as

investment areas likely to receive increased budget allocations under the

government's growth strategy, the outlook for defense spending, and the planned

US$550 billion investment package in the United States continued to attract

attention.

Interestingly, several investors asked whether a yen carry trade unwind akin to that

seen in 2024 could re-emerge. Some investors also asked about the economic

impact on Japan if the Middle East situation were to deteriorate further. Overall,

however, the tone toward Japan's economic outlook remained generally

constructive. Note that a chart in our presentation showing the widening divergence

between nominal GDP and equity prices drew particular attention from some

investors.

What is behind the "Honebuto Shock"? Our view: The Basic Policy on Economic

and Fiscal Management and Reform ("Honebuto Policy"), approved by the Cabinet on

July 21, contained no major surprises and was fundamentally unchanged from the

draft released in late June.

In our view, overseas investors' concerns are not about specific language in the

document regarding fiscal consolidation or BoJ independence. Rather, they stem

from a more general sense of uncertainty surrounding the potential scale of future

government spending expansion.

The Cabinet Office's fiscal projections under the new growth strategy, released on