Sumitomo Life to remain cautious on JGB yields, keep investment pace unchanged from H1

Reuters

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"For life insurers, a rise in super-long Japanese government bonds leads to improved returns on new investments and expands investment opportunities, but we will continue to monitor the movements of yields carefully, as a rapid move in yields or loss of market confidence in fiscal management could fuel market volatility," said Tadakazu Izumi, the firm's general manager in the investment planning department

Sumitomo Life expects its JGB holdings in its Asset Liability Management portfolio will decrease in the second half of this fiscal year, mirroring results from the first half

On Monday, the selloff in French government bonds paused after Moody's maintained its rating of Aa3. Weekend protests were mostly peaceful, reducing tensions in the country. France's 10-year OAT yield fell following a rise to its highest level since June 2002. The focus now turns to the European Central Bank's upcoming policy decision on Thursday. Analysts expect the ECB to monitor the rising yields closely and evaluate their impact.

Sumitomo Life expects the Bank of Japan to raise its policy rate to 1.5% in December and hike it again to 1.75% in April

Sumitomo Life expects the 10-year JGB yield to be at 3.1% at the end of March, with the 30-year JGB yield at 4.2%