TechFlow, Dec 2 - The possibility of the Bank of Japan resuming rate hikes earlier than expected has shaken global bond and stock markets, but Capital Economics says such concerns may be overstated. Analyst Thomas Mathews wrote that while Japan is a major global creditor, rising Japanese government bond yields do not necessarily trigger capital repatriation that would put global markets at risk. On one hand, Japanese investors targeting foreign bonds face costs associated with hedging short-term foreign exchange risks. On the other hand, even if higher JGB yields pressure bond markets elsewhere, this would not derail the global equity rebound, which is based on earnings growth rather than higher valuations. This situation is likely to persist. (Jinshi)
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