Mitsubishi UFJ Financial Group and other bank stocks hold firm as long-term interest rates top 3% for first time in 30 years

Mitsubishi UFJ Financial Group Inc. <8306> reversed early losses to trade higher, extending gains in the afternoon session. Bank stocks including Sumitomo Mitsui Financial Group Inc. <8316> and Mizuho Financial Group Inc. <8411> were broadly firm. Japan's long-term interest rates climbed above 3% during the session, reaching a 30-year high, providing a tailwind for bank stocks, which benefit from rising rates.

Expectations are growing that the Bank of Japan will raise interest rates at its monetary policy meeting scheduled for the 17th-18th of this month, while speculation over an early U.S. rate hike has also emerged. Fiscal concerns are mounting in both Japan and the U.S., putting upward pressure on domestic and global yields. Japan's Ministry of Finance held a 10-year government bond auction on the 1st, where the bid-to-cover ratio rose to 3.29 from the previous auction, though some market participants viewed the result as slightly weak. According to market sources, so-called unidentified bids - allotments whose buyers remain unclear - totaled nearly 1.3 trillion yen, prompting speculation that the Government Pension Investment Fund (GPIF) may have stepped in to support demand given the scale involved. As optimism over genuine bond market demand has yet to take hold and expectations for further rate increases remain entrenched, bank stocks continue to attract few aggressive sellers.

Source: MINKABU PRESS

*Translated by generative AI. Click here for the original article.