Natixis Investment Managers has raised its allocation to Japanese equities, betting the nation’s economic growth momentum will endure as inflationary pressures push government bond yields higher, its strategists said in a recent interview. Japan’s monetary and fiscal policies are more supportive of its economy and stock market compared with those in the U.S., where Natixis has pared exposure, said Mabrouk Chetouane and Romain Aumond. But we are convinced that the best risk reward is on the equity side.” The asset manager, which oversees about $1.5 trillion globally, changed its weighting Monday, a day before Japan’s 10-year government bond yield touched 3% for the first time this century.
The firm previously viewed the level as a potential pain threshold for stocks. Chetouane said higher inflation translates into a boost for corporate revenues and earnings and that “this is exactly what the market is pricing.” The firm has maintained “underexposure” to bond markets globally as the performance in longer-dated maturities has been negative, the strategists said. In the U.S., the 30-year yield has climbed to levels seen just before Treasury Secretary Scott Bessent shocked markets last month by expanding a buyback program in an effort to halt the rise.
The U.K. 30-year yield reached the highest since 1998, while the Australian 10-year yield surged to a 15-year high on Tuesday. Kazuo Ueda hinted that a rate hike is likely when the board convenes for a meeting later this month, while overnight index swaps are now fully pricing in a rate hike at that meeting. Given the strength of Japan’s economic indicators such as wage growth, Natixis sees more room for positive performance by Japanese stocks both in 2026 and 2027.
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