HSBC: Market concerns that inflation is not a temporary phenomenon, and rising long-term interest rates may reflect structural changes

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ME News report: On May 18 (UTC+8), HSBC economist Frederic Neumann said that if the current rise in Japanese government bond yields is purely driven by short-term concerns about inflation, long-term yields would not move so much. Investors are clearly uneasy, believing that the current increase in price pressures is not merely a temporary phenomenon related to the Gulf crisis, but rather a signal that inflationary pressures have structurally returned—something that will force central banks to tighten policy not only in the short term, but also to keep high interest rates for a longer period. Investors are increasingly concerned about fiscal conditions, especially in major developed markets, and therefore are demanding a higher risk premium for holding long-term debt. Against this backdrop, the government bond market is increasingly competing with capital demand driven by the global AI boom, thereby pushing up the cost of long-term capital. (Source: Jintou)
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