On August 7th, BlackRock published a post stating that more central banks around the world are starting to take interest rate cuts, but this does not mean that the world is entering a typical period of monetary easing. Due to reduced summer trading activity, the market may be overreacting to data volatility. Short-term government bonds and credit bonds are favored, and considering the current market reaction, the Bank of Japan will adjust its hawkish policy stance, maintaining an overweight view on Japanese stocks. In the long term, BlackRock believes that long bond yields will eventually rise as investors demand higher term premiums or more risk compensation for holding long-term bonds. However, obtaining term premiums takes time, and as yields will fluctuate significantly with changes in policy expectations, a neutral stance is maintained on long-term government bonds tactically. The drop in bond yields last week was due to market expectations of a large rate cut by the Federal Reserve and excessive concerns about a US economic recession. The American labor market remains resilient: while job growth has slowed, it is still strong, the employment rate is rising, and layoffs by businesses have not increased. Although recent US inflation data has fluctuated, sustained wage pressures and labor shortages will lead to long-term inflation in the services sector. In addition, the massive future US fiscal deficit will keep interest rates at a neutral level (neither stimulating nor inhibiting economic growth), and higher than pre-pandemic levels. BlackRock states that factors catalyzing term premiums may emerge, but the timing remains uncertain. One factor is the US presidential election, which could shift market focus to fiscal prospects. The US Treasury's bond issuance plan currently does not require major adjustments. However, BlackRock expects that to match the pace of government spending, net bond issuance will eventually increase significantly. If the market struggles to absorb these bond issuances, term premiums could rise as a result. Another catalyzing factor is the Federal Reserve's adjustments to the size of its balance sheet or the duration of bond holdings. The Federal Reserve is still a significant buyer of long-term bonds and has purchased about 10% of 10 and 30-year bonds by 2023, holding about 30% of circulating bonds with maturities of over 10 years. The composition of buyers is also worth noting: while purchases by foreign buyers have decreased, more and more American households are entering the market. Furthermore, BlackRock believes that the policy adjustments of the Bank of Japan will also have an impact on global bond term premiums. If the Bank of Japan takes a more aggressive stance against inflation risks, it may push up bond yields, prompting Japanese domestic investors to prefer domestic bonds over foreign bonds from the US, the eurozone, etc. In response to the recent severe volatility in global markets, a survey of professional investors in the Asia-Pacific region by BlackRock shows that in the face of the current global sell-off of risk assets, 94% of investors say they will take advantage to buy or continue holding and observe changes in the market.