Ideas
Buy cheap US curve steepener.
Interest rate volatility is very cheap and did not spike despite Fed-independence headlines, while the US 2s10s curve is only about 44bp and among the flattest globally. Whether the Fed cuts, term premium rises, or inflation expectations shift, she sees a US yield curve steepener as an attractive way to play the uncertainty and likes adding cheap US rates optionality/protection.
Takaichi trade lifts Japanese equities.
Growing speculation that Takaichi could call a snap election as soon as next month could strengthen her parliamentary position and allow her fiscal expansionary stance to continue, which she views as positive for Japanese equities. The Takaichi trade may revive with Nikkei support, though an LDP underperformance would create more political uncertainty and weigh on Japanese assets.
Takaichi spending lifts defense and tech.
Takaichi's largest fiscal spending package since COVID has already lifted defense, tech, nuclear power and quantum-computing-related sectors, and if a snap election strengthens her mandate she can deepen fiscal expansion in these areas she wants to strengthen.
Fiscal expansion pressures Japanese bonds.
Takaichi's aggressive fiscal expansionary stance weighs on the Japanese government bond market; bond yields are expected to climb, especially at the long end, pressuring JGB prices.
Japanese financials gain on higher rates.
Financials and bank-related stocks have gained on BOJ rate hikes and rising long-end JGB yields, making them a key sector beneficiary of the Takaichi trade.
Yen intervention risk builds.
The yen is at its weakest since last January and finance ministry concerns about one-way moves make intervention look increasingly likely. She sees this as a key risk and setup, with weak yen helping exporters but feeding sell-Japan anxiety.
RMB appreciates versus basket, stable vs USD.
From a fundamental perspective she expects the RMB to appreciate versus a basket of currencies; because the dollar may rebound a little, she sees USD/CNY holding around 7.
RMB appreciates versus basket, stable vs USD.
From a fundamental perspective she expects the RMB to appreciate versus a basket of currencies; because the dollar may rebound a little, she sees USD/CNY holding around 7.
Banks face high earnings bar.
Ahead of JPMorgan, Citigroup and Bank of America earnings, he expects strong trading and fee income, solid commercial lending, CRE and card lending, but bank valuations at 1.6-1.7x tangible book are at the high end of recent years. That raises the bar for guidance and makes margins or expenses a potential hiccup.
China market momentum to continue.
International investors were heavily underweight China, with allocations falling from about 2.5% in 2024 to 1.3% in 2025. He says interest is coming back, Chinese market performance was strong, and this momentum should continue, helped by growth and innovation.
China tech and biotech innovate.
Growth and innovation in technology and biotech is here to stay in China, and investors are realizing it. Chinese companies are moving from fast followers to setting new standards, creating new frontiers of innovation.
Japan has renewed investment optimism.
After 30 years he senses renewed optimism across Japanese corporates, investors, government and regulators. Rates are rising in a new paradigm that is here to stay, Japan is a major wealth-management and savings pool, and he expects more foreign investment into Japan and Japanese corporate outbound deployment.
China stocks earnings-led rally has legs.
The China equity rally has legs because earnings are estimated to grow 15-16%, supporting bottom-up targets and about 20% upside in MSCI China. Valuations remain cheap around 12x versus the US at 22x, fund managers are increasing exposure, and the revived sell-America trade could channel more flows into China, making this a more durable earnings-led rally.
China AI stocks are a bet.
China AI excitement and semiconductor listing activity underscore trust in China's AI-related stocks. AI should boost earnings rather than just valuations, and China is a bet on AI with more market capitalization to be created, supported by investors excited about the theme.
This Bloomberg Markets video, published January 13, 2026,
features Nancy Davis, Alice French, Ning Zhang, Herman Chan, Sergio Ermotti, Abhishek
discussing US 2s10s yield curve steepener, US interest rate volatility, N225, EWJ, Japanese defense, Japanese nuclear power, Japanese tech/AI, Japanese quantum computing, Japanese government bonds, DXJ, FXY, CNY, USD/CNY, JPM, C, BAC, FXI, Chinese technology, Chinese biotech, MCHI, Chinese AI stocks.
14 trade ideas extracted by AI with direction and confidence scoring.
Speakers:
Nancy Davis,
Alice French,
Ning Zhang,
Herman Chan,
Sergio Ermotti,
Abhishek
· Tickers:
US 2s10s yield curve steepener,
US interest rate volatility,
N225,
EWJ,
Japanese defense,
Japanese nuclear power,
Japanese tech/AI,
Japanese quantum computing,
Japanese government bonds,
DXJ,
FXY,
CNY,
USD/CNY,
JPM,
C,
BAC,
FXI,
Chinese technology,
Chinese biotech,
MCHI,
Chinese AI stocks
