Japan Financial Stocks Surge as BOJ Loosens Grip on Yields

By Kosaku Narioka

Japanese financial stocks rose sharply Friday after the Bank of Japan said it will operate its interest-rate policies more flexibly, leading the 10-year government bond yield to hit the highest level in nearly nine years.

Shares of Mitsubishi UFJ Financial Group were recently 4.7% higher, and those of Dai-ichi Life Holdings advanced 7.4%.

The 10-year Japanese government bond yield was recently 12 basis points higher at 0.555% after rising to 0.575% earlier, the highest level since September 2014.

Higher government bond yields mean banks and insurers could charge higher interest rates on commercial loans and earn better yields from bonds and other investments.

The Japanese central bank on Friday decided to maintain its cap on the 10-year JGB yield at 0.5% and kept short-term interest rates unchanged at minus 0.1%.

However, the central bank said it will enforce the 0.5% cap with greater flexibility and consider the upper bound as a reference point, not a rigid limit. The bank said it will purchase JGBs at a 1% yield every business day, which effectively sets a new hard cap for the 10-year yield at 1%.

Write to Kosaku Narioka at kosaku.narioka@wsj.com

(END) Dow Jones Newswires

July 28, 2023 01:35 ET (05:35 GMT)

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