Possible scenario
Fiscal Premium Widens
25% Chance
Investors demand more compensation for holding JGBs because of fiscal concerns, heavy issuance, and uncertainty over the BOJ's reduced role as a buyer. This outcome would pressure long-duration assets and companies with high refinancing needs.
Initial impacts
- Riskier companies' borrowing costs Up
- Market volatility Up
- 10-year Treasury yield Up
Secondary impacts
- Utilities -1.6%
- Finance -1.0%
- Consumer Cyclicals -0.7%
Portfolio impact
S&P 500-1.0%
Each figure is the modeled move of the S&P 500 if the outcome occurs. For information only. Not investment advice.
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