MUFG Bank Rebuilds Japanese Government Bond Positions

MUFG Bank is gradually rebuilding its position in Japanese government bonds despite persistent concerns over monetary and fiscal policy. The bank is tentatively increasing its holdings of benchmark bonds while monitoring market volatility driven by national financial management.

Atsushi Yamashita, chief executive of the bank's global markets business, expects 10-year government bond yields to peak at approximately 3.2%, which is slightly above the recent three-decade high of 3.115%. Yamashita noted that the bank plans to rebuild its position gradually while carefully assessing interest-rate levels.

However, the bank remains cautious about potential further yield increases. Yamashita warned that yields could rise if the Bank of Japan fails to contain inflation or if Prime Minister Sanae Takaichi cannot reassure investors regarding the management of government finances. He stated that the risks of a further yield rise have not been completely eliminated.