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MNI: Japan's Dai-ichi Life To Buy Super-Long JGBs

(MNI) Tokyo

Japan’s Dai-ichi Life Insurance will increase its holding of yen bonds in the October-March period, building on purchases of Japanese government and corporate bonds through the April-September period, the company's fund manager said Monday.

“The company will likely accelerate the pace of buying super long-term JGBs, such as 30-year, in the second half of this fiscal year, although we restricted the pace of those bond buying in the first half of this fiscal year," Kouhei Horikawa, general manager of the investment planning department at Dai-ichi Life, told reporters.

Japan's second largest life insurer by assets, Dai-Ichi expects 10-year JGB yield to move in a range of -0.10% to 0.40% during the second half of this fiscal year and trade at around 0.25% at the end of this fiscal year. The upper level of Dai-Ichi range is above the BOJ's target range of -0.25% to +0.25%.

“We basically expect the BOJ to maintain current easy policy this fiscal year but we cannot completely rule out the possibility of policy adjustments” said Horikawa.

The company expects the dollar to move in a range of JPY135 to JPY155 and euro to move between JPY130 and JPY150 in the second half of this fiscal year. The U.S. dollar and euro are expected to trade at around JPY145 and JPY141, respectively, at the end of March.

Horikawa added that inflationary pressure in the U.S. will likely slow in the second half of this fiscal year, which will slow Fed’s rate hikes and cause the yen to strengthen towards the end of this fiscal year. Horikawa said the company sees a gradual rise in U.S. interest rates and he expects the U.S. 10-year bond yield to rise to 3.8% by the end of March 2023 with trading between 3.3% and 4.5% during this fiscal year.

MNI Tokyo Bureau | +81 90-2175-0040 |
MNI Tokyo Bureau | +81 90-2175-0040 |

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