CICC Securities: The benign inflation cycle in Japan has become more stable, and the Bank of Japan is about to raise interest rates again.

The research report of CITIC Securities believes that the benign inflation cycle in Japan is now more stable, and the Bank of Japan is about to raise interest rates again. The global market turbulence following Japan's rate hike last summer was mainly caused by the warming of recession expectations and the shaking of AI narratives in the United States, with the unwinding of carry trades only exacerbating the secondary factor of risk aversion at that time. Last year's "Black Monday" is unlikely to be repeated this year. Against the backdrop of policy divergence between the US and Japan, US factors are the core theme of global liquidity and US dollar asset pricing. Currently, market doubts about AI narratives are primarily focused on a few companies with aggressive business models, while most financially robust AI leaders are still able to maintain market trust. The trend of industrial intelligence should continue to support the performance of leading US stocks in the medium to short term. The risk-adjusted allocation of long-term US bonds in this round of risk-management rate cuts is not high, while short-term US bonds may benefit from the technical improvement of liquidity due to reserve management purchases, with the latter being better than the former.