Daily Commentary

MarketMinder’s View: Hats off to the headline here, which hints at our view of the Bank of Japan’s (BoJ’s) move: It is another step toward normalizing monetary policy. The Bank of Japan’s long-running nemesis isn’t inflation but deflation, leading to an alphabet soup of weird, conflicting and counterproductive policies aimed at boosting prices over the past 25-ish years. Stable domestic economic fundamentals, along with more consistent (and by global standards utterly tame) inflation have given the BoJ room to move further away from its negative-rate era, yet rates there remain low by global standards. Interestingly, sentiment toward Japanese rate hikes has shifted wildly over the past two years. When hikes began, headlines and the yen freaked out over feared disruptions to the yen carry trade, which was supposedly pumping global markets (people borrowing in yen then investing elsewhere to capture currency gains as well as market returns). Now people have seemingly gotten used to the BoJ’s moves, as this very calm article indicates. There is no freakout, illustrating how broader sentiment has improved during this bull market. As for whether the move itself is wise, given Japan’s 10-year yield is still a bit north of 2.6%, per FactSet, short rates at 1% leave the yield curve plenty steep. We think monetary policy should still support lending and growth.

MarketMinder’s View: A decent portion of this piece focuses on sociological issues (e.g., income inequality), so please remember sociology isn’t a market driver. We highlight this discussion because it illustrates one of the big headline worries weighing on sentiment today and counterbalancing creeping AI enthusiasm. Namely, rising stocks (especially a couple big names going public) are supposedly enriching a handful folks, but most regular folks are purportedly falling behind as elevated energy prices eat into real (inflation-adjusted) wage growth—and that distress is showing up in recent tumbling sentiment surveys. Perhaps this is true. Losing purchasing power at the grocery store or gas pump can certainly be frustrating and may be a hardship for some families. While it is normal for real wages to drop when inflation first erupts since faster wage growth tends to follow inflation, helping folks eventually catch up, that is probably cold comfort now. Overall though, we see a big gap between sentiment and reality here. As the article notes, over half of US households own stocks and are also therefore benefiting from the ongoing bull market. And despite people’s feelings, household balance sheets are in good shape, as we showed here. But That inflation worries and generally dour sentiment (outside Tech) remain atop many commentators’ minds is counterintuitively bullish, as false fears are bull market fuel.

MarketMinder’s View: Some sobering statistics from across the pond: “UK banks reported almost 15,000 investment scams in 2025 as criminals use artificial intelligence to dupe people out of their money. About £221.5m was lost to scams in which people were persuaded to move their money to a fake investment or a fictitious fund, a rise of 40% from the year before, according to the report from UK Finance.” As we have seen stateside, fraudsters are increasingly using AI technology to imitate financial professionals, celebrities or even loved ones. From there, “criminals will promise high returns on investments that could range from gold, property and carbon credits to cryptocurrencies and wine.” AI advances now allow bad actors to cast a wide net, meaning potential victims must be hyperaware of the tactics. As sophisticated as the technology has gotten, though, many frauds feature common red flags. For example, flashy returns that sound too good to be true are a common one, as they are meant to appeal to greed. An inbound communication purportedly coming from a celebrity should always be a red flag. And if you can’t tell if someone is a loved one or a scammer, simply hang up or ignore their message and contact that person directly to verify. We find a calmer, cooler approach can go a long way in avoiding rash, emotion-driven decisions.