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4 Jun 2013
Flash: Honeymoon for Abenomics finally ends - Nomura
FXstreet.com (Barcelona) - Richard Koo chief economist at the Nomura Research Institute notes that the honeymoon period for Abenomics has finally ended.
The result he writes, was a correction in the JGB market from mid-April onwards, with the ensuing turmoil prompting a correction in equities as well. In that sense, he adds that the period from late last year until mid-April was a honeymoon for Abenomics in which everything that could go right, did. However, he notes that the honeymoon was based on the assumption that the bond market would remain firm. He writes, “The recent upheaval in the JGB market signals an end to the virtuous cycle that pushed stock prices steadily higher. This means further gains in equities will require stronger corporate earnings and a recovery in the economy.”
The result he writes, was a correction in the JGB market from mid-April onwards, with the ensuing turmoil prompting a correction in equities as well. In that sense, he adds that the period from late last year until mid-April was a honeymoon for Abenomics in which everything that could go right, did. However, he notes that the honeymoon was based on the assumption that the bond market would remain firm. He writes, “The recent upheaval in the JGB market signals an end to the virtuous cycle that pushed stock prices steadily higher. This means further gains in equities will require stronger corporate earnings and a recovery in the economy.”