Japanese major banks expand government bond holdings, is the global capital flow about to change?

【Chain Wen】Japan’s second-largest financial group recently sent a significant signal—planning to double its Japanese government bond holdings after the adjustment of government bond yields, expanding from the current 10.6 trillion yen to a larger scale. The underlying logic is quite interesting.

The group’s global market head provided a clear expectation: the 10-year Japanese government bond yield will break through 2.5% by the end of the year, and the reasonable operating range in the future should be between 2.5% and 3%. From another perspective, this indicates that Japanese financial institutions believe there is still room for yields to rise, and now is a good time to allocate.

What’s more notable is their judgment on the exchange rate and stock market. They predict the yen may depreciate to 180 against the US dollar in the next few years (what is the current rate?), while they are optimistic about the Nikkei 225 index breaking through 60,000 points within the year. This series of predictions all send a signal: Japan’s economy and financial markets are undergoing an important cyclical shift.

Why is this worth paying attention to? Because some analysts point out that if Japanese investors keep more funds in the domestic market due to rising government bond yields, potential buyers of US Treasuries will decrease, which could impact dollar liquidity and the global capital allocation pattern. For those interested in macroeconomics and asset allocation, this is a chain reaction worth pondering.