While US Treasury yields jumped sharply, tech stocks and credit bonds rebounded in tandem. This "abnormal resonance" broke the market's traditional expectation that high interest rates would suppress risk assets, and it also left investors doubting whether this combination can be sustained.
According to news from the trading desk, on November 13, Nomura strategist Naka Matsuzawa pointed out in a research report that the rebound in tech stocks is more likely just a technical repair after a previous sharp decline, and confidence that AI investment returns can cover the current interest rate level has not actually been rebuilt.
Analysts believe that the sustainability of this combination will be the core issue for the market in the coming week. If Federal Reserve officials fail to correct the market's overly aggressive pricing of consecutive rate hikes, financing pressure on tech companies may resurface, and at that point the scenario of stocks and bonds rising together may be difficult to sustain.
The week's biggest surprise: rate hike expectations and an "abnormal" rally in tech stocks occurring together
Nomura summarized two contradictory phenomena in this week's market:
First, expectations for Federal Reserve rate hikes heated up sharply. The stronger-than-expected rise in US CPI data was the direct trigger, and Federal Reserve Governor Waller then made hawkish comments, publicly supporting a one-time 50 basis point rate hike, further pushing up market expectations.
As a result, the market not only pushed the implied probability of a December rate hike to 111%, already implying some possibility of a 50 basis point increase, but also priced the probability of rate hikes at three consecutive meetings (through March next year) at about 80%. This tightening pace has exceeded the market expectation level before the risk aversion triggered by the tech sector in early October.
Second, tech stocks and credit bonds rebounded sharply at the same time. Although rising yields are usually seen as the "natural enemy" of tech stocks, this week tech stocks rose strongly against the trend.
In response, Naka Matsuzawa pointed out that there are two interpretations:
The optimistic explanation is that the market had already fully digested various risks during the earlier decline, such as financing difficulties, circular transactions, business obstacles, and excessive competition, and investors regained confidence in AI investment, believing that its expected returns are sufficient to cover the current interest rate level.
The pessimistic explanation is that this is merely a technical rebound after the previous sharp decline. Naka Matsuzawa clearly stated that he believes the latter is closer to the truth.
The implication of this judgment for investors is that if the Federal Reserve does not step in to correct the market's excessive rate hike expectations, financing pressure on tech companies will sooner or later resurface.
Bond market: rate hike expectations are already priced ahead, watch dovish officials' comments
The bond market suffered a broad shock this week. The 10-year US Treasury yield posted the largest weekly increase, rising 25 basis points, followed by Japan up 16 basis points, the UK up 15 basis points, and Germany up 9 basis points.
The yield curves of the United States, the United Kingdom, and Germany showed a "bear flattening" pattern, while Japan showed a "bear steepening." Real yields rose across all G4 economies, and inflation expectations widened in all regions except Japan.
(30-year Japanese government bond yields and yield curve)
In terms of expected terminal policy rates, the United States jumped from 4.24% at the end of last week to 4.55%, the euro area edged up from 3.17% to 3.19%, and Japan rose from 2.05% to 2.26%.
(G3 policy rate expectations)
Nomura believes that the next core focus in the bond market is the direction of statements from relatively dovish Federal Reserve officials:
If their stance turns hawkish, expectations for consecutive rate hikes will continue.
If they emphasize tightening financial conditions or the financing fragility of the tech sector, rate hike expectations may cool.
In addition, the report also mentioned that the recent weakness of the yen was mainly driven by dollar strength, rather than problems with the yen itself. EUR/JPY has fallen from a high near 186 in early September to about 176, the lowest level since October 2025.
Against this backdrop, the space and willingness of Japanese authorities to intervene in the foreign exchange market are both very limited. The research report pointed out that the next turning point for USD/JPY is most likely to appear when Federal Reserve rate hike expectations decline.
Stock market: whether the tech stock rebound can continue, while non-tech sectors struggle to take over leadership
Global stock markets rose broadly this week, with Japan posting the largest gain, up 6.2%, followed by the United States up 3.0%, Europe up 2.4%, and emerging markets up 4.9%.
Within the US stock market, the semiconductor sector's SOX index surged 11.4%, hyperscale cloud computing rose 2.8%, software stocks rose 0.1%, and the Russell 2000 small-cap/mid-cap index rose 1.8%.
However, Nomura remains cautious about the outlook because the logic of capital rotation into the tech sector this time does not hold. The research report noted that during the period of rising yields, consumer-related sectors and real estate stocks weakened, indicating that the positive cycle of "economic recovery + rising yields + capital rotating into non-tech sectors" has not started.
For next week, Naka Matsuzawa gave a clear scenario judgment:
If tech stocks pull back without yields falling, the rotation effect into non-tech sectors will not be enough to offset an overall decline.
If yields do fall, tech stocks may receive support, but this scenario is also unfavorable for capital inflows into non-tech sectors. Under both scenarios, the overall stock market faces headwinds.
His baseline forecast for next week is: stocks broadly flat, bonds relatively strong, the dollar relatively soft, and the yen relatively strong.
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