Bitcoin Slumps 9% as Tech Rout Ripples Through Asian Markets

Economic

Cryptocurrency

Summary:

Bitcoin tumbled nearly 9% while Asian equities mostly weakened, as a renewed selloff in U.S. technology stocks dragged global risk sentiment lower and erased much of the optimism built earlier in the year....

Wall Street Tech Losses Set A Risk-Off Tone

Global markets moved defensively after U.S. stocks extended their losing streak, led by sharp declines in technology shares. On Thursday, the S&P 500 dropped 1.2% to 6,798.40, marking its sixth loss in seven sessions, while the Dow Jones Industrial Average fell 1.2% to 48,908.72. The Nasdaq Composite slid 1.6% to 22,540.59, underperforming as concerns intensified over whether massive investments in artificial intelligence would generate sufficient long-term returns.

Futures pointed to further weakness, with S&P 500 futures down 0.3% and Dow futures lower by 0.2%, reinforcing cautious positioning ahead of the U.S. open. The pullback reflects growing skepticism around capital expenditure-heavy AI strategies rather than a sudden deterioration in macroeconomic conditions.

Bitcoin Gives Back Post-Election Gains

Bitcoin mirrored the broader risk-off move, falling around 9% to just under $65,000 in early Asian trading. The world’s largest cryptocurrency briefly sank more than 12% on Thursday, dipping below $64,000. This decline leaves Bitcoin at roughly half its October peak above $124,000 and wipes out all gains accumulated since Donald Trump secured a second term in the White House.

The sharp retreat reflects a correlation with declining risk appetite rather than a crypto-specific shock. As enthusiasm for high-growth assets faded amid equity market volatility, leveraged positions in digital assets unwound rapidly, amplifying downside pressure.

Asian Markets Track Global Sentiment

Asian equities were mixed but broadly softer as investors digested the overnight losses on Wall Street. Japan’s Nikkei 225 rose 0.5% to 54,073.52, recovering from earlier declines, supported by gains in technology-related stocks. SoftBank Group climbed 1.9%, while chipmaker Tokyo Electron advanced 3%. Political factors also remain in focus, with Japan heading into a general election on Sunday in which Prime Minister Sanae Takaichi is seeking a stronger public mandate.

Elsewhere, South Korea’s Kospi fell 1.7% to 5,076.69, weighed down by losses in major chipmakers. Samsung Electronics slipped 0.9%, while SK Hynix declined 0.6%, reflecting continued sensitivity to global semiconductor sentiment. Hong Kong’s Hang Seng Index dropped 1.2% to 26,569.14, while mainland China’s Shanghai Composite Index was flat at 4,075.37.

In Australia, the S&P ASX 200 slid 1.6% to 8,745.60, and Taiwan’s Taiex edged down 0.2%, underscoring uneven but cautious regional trading.

AI Spending Concerns Hit Big Tech

Technology stocks bore the brunt of the U.S. selloff. Qualcomm sank 8.5% despite reporting better-than-expected quarterly revenue, highlighting how valuation concerns are overshadowing near-term earnings performance. Alphabet slipped 0.5% as investors focused on its heavy AI-related spending plans.

Amazon fell 11% in after-hours trading after announcing intentions to lift capital expenditure by more than 50% to $200 billion for AI and other initiatives. At the same time, new AI tools unveiled by Anthropic intensified fears that rapid advances in automation could disrupt traditional software services, contributing to a broader reassessment of technology sector risk.

Precious Metals And Commodities Remain Volatile

Safe-haven assets also showed instability following a months-long rally. Gold fell 1% to $4,843.70 per ounce after nearing $5,600 last week, while silver dropped 6.6% to $71.63 per ounce, extending losses after plunging more than 31% the previous Friday. These moves suggest that heightened volatility, rather than steady hedging demand, is currently dominating precious metals pricing.

In energy markets, U.S. benchmark crude rose 35 cents to $63.64 a barrel, while Brent crude gained 36 cents to $67.91, supported by modest buying interest. Currency markets were relatively subdued, with the U.S. dollar easing to 156.74 yen and the euro ticking up to $1.1789.

Overall, the synchronized pullback across equities, cryptocurrencies, and precious metals highlights a fragile market environment. The current phase appears driven less by deteriorating fundamentals and more by de-risking behavior as investors reassess valuations, liquidity conditions, and the long-term payoff of aggressive technology investment cycles.

Source: CNBC

To stay updated on all economic events of today, please check out our Economic calendar

Risk Warnings and Disclaimers

You understand and acknowledge that there is a high degree of risk involved in trading. Following any strategies or investment methods may lead to potential losses. The content on the site is provided by our contributors and analysts for information purposes only. You are solely responsible for determining whether any trading assets, securities, strategy, or any other product is suitable for investing based on your own investment objectives and financial situation.

Add to Favorites

Gerik

Economic

Stocks

Tech Weakness Spills Across Asian Markets

According to Reuters, Asian equities fell on Friday as investors continued to pull back from technology stocks, following renewed weakness in U.S. tech markets. South Korean shares led the decline, with the KOSPI dropping 1.7%, dragging the MSCI index of emerging Asian equities down 0.5%. A broader gauge of Asian stocks excluding Japan slid by nearly 2%, highlighting how concentrated selling in technology spilled into regional benchmarks.

In Seoul, heavyweight chipmakers Samsung Electronics and SK Hynix fell 1.2% and 0.2% respectively, pushing the regional information technology index down about 2.4%. The pressure reflects investor caution rather than a collapse in sector fundamentals, as positioning had become increasingly stretched after a strong rally earlier in the year.

AI Developments Add To Sector Anxiety

Market sentiment was further unsettled after AI firm Anthropic unveiled a new legal tool for its Claude chatbot earlier this week. The announcement sparked concerns about broader disruption across the technology and software services sector, particularly for firms exposed to regulatory and legal risk. While the development itself does not directly alter earnings outlooks, it has heightened uncertainty at a time when valuations remain elevated.

Analysts note that the current selloff reflects de-risking behavior rather than a breakdown of the long-term technology theme. With U.S. tech stocks wobbling, negative sentiment has tended to correlate with Asian tech performance, especially in markets where gains had been driven by aggressive inflows and leveraged positioning.

Indonesia Hit By Credit Outlook Downgrade

Southeast Asia’s largest economy saw sharper losses. Indonesian shares fell more than 2% in early trading, with the Jakarta Composite Index extending its recent decline. The rupiah weakened to 16,885 per U.S. dollar, its lowest level since January 22, reflecting capital outflows and rising risk premiums.

Investor confidence deteriorated after Moody's lowered Indonesia’s credit rating outlook, citing concerns around policy uncertainty, a widening fiscal deficit, and questions over central bank independence under President Prabowo Subianto. The outlook change does not trigger an immediate downgrade, but it has reduced appetite for additional exposure, particularly among foreign investors with stricter risk constraints.

Foreign investors withdrew around $1 billion from Indonesian equities in 2025, and outflows have accelerated since mid-last week following warnings from MSCI about a potential reclassification toward frontier-market status. These developments are correlated with rising volatility in local assets rather than directly causing capital flight, but together they have amplified downside pressure.

Bond Markets And Policy Response In Focus

Indonesia’s 10-year government bond yield rose to 6.317%, reflecting higher risk compensation demanded by investors. Analysts at DBS expect near-term weakness in onshore financial markets as an initial reaction to the outlook change, with attention now shifting to how domestic policymakers respond. While rating-sensitive mandates are not immediately affected, investors are showing a preference for shorter-dated securities, signaling a more defensive stance.

Elsewhere in the region, market moves were more subdued. Stocks in Malaysia, the Philippines and Taiwan were largely flat, while Singapore’s benchmark index fell 0.7%. Thailand’s SET Index rose 0.5%, supported by pre-election positioning ahead of Sunday’s general election.

Currency markets reflected similar divergence. The South Korean won weakened to around 1,470.60 per dollar, its lowest level in over two weeks, while the Thai baht gained roughly 0.2%. Political events are also in focus, with Thailand voting on Sunday and Japan holding a snap election the same day, called by Prime Minister Sanae Takaichi. A strong showing by Japan’s ruling coalition could reduce expectations for a large fiscal stimulus, adding another layer of uncertainty to regional market sentiment.

Overall, the latest selloff underscores how fragile confidence remains across Asian markets. Technology stocks are bearing the brunt of global de-risking, while Indonesia’s outlook downgrade has exposed sensitivities around policy credibility, leaving investors cautious as political and macroeconomic risks converge.

To stay updated on all economic events of today, please check out our Economic calendar

Risk Warnings and Disclaimers

Add to Favorites

Gerik

Economic

Polls Point To Dominant Ruling Coalition Victory

Japan’s political landscape appears poised for a dramatic reset as opinion polls indicate a landslide win for Prime Minister Sanae Takaichi and her ruling coalition in the upcoming snap election. A survey conducted by Nikkei between Tuesday and Thursday projects that the Liberal Democratic Party, together with its coalition partner the Japan Innovation Party, could secure more than 300 of the 465 seats in the Lower House. This outcome would mark a sharp reversal from the political instability that has plagued the ruling bloc over the past year.

These findings align closely with an earlier poll by Asahi Shimbun, reinforcing expectations that the ruling camp is on track for a commanding majority. Separate polling by Kyodo News goes even further, suggesting that the LDP alone could surpass the 233-seat threshold required for a single-party majority. The convergence of multiple polls indicates a strong correlation between Takaichi’s leadership and rising voter support, rather than a fragmented or protest-driven electorate.

Legislative Control Becomes the Central Prize

Beyond headline seat counts, the composition of the next Lower House carries significant institutional implications. According to Nikkei, the LDP is targeting more than 261 seats, a level that would allow it to control all parliamentary committees and chair positions. Achieving a two-thirds majority would also enable the ruling bloc to override vetoes from the Upper House, fundamentally reshaping the balance of power within Japan’s legislature.

This potential consolidation of authority stands in stark contrast to last year’s setbacks, when the LDP lost its majority in the Upper House and suffered a Lower House defeat in 2024. Those losses culminated in the resignation of former Prime Minister Shigeru Ishiba in September, leaving the party weakened and internally divided. A decisive win now would reverse that trajectory, restoring legislative dominance rather than merely stabilizing governance.

Opposition Faces Severe Seat Losses

While the ruling coalition appears ascendant, opposition forces are projected to face heavy losses. The Central Reform Alliance, comprising the Constitutional Democratic Party of Japan and Komeito, is forecast to see its representation roughly halved from the current 167 seats. This decline reflects a shift in voter alignment rather than a structural collapse of opposition platforms, suggesting that the ruling bloc’s momentum is driven more by leadership appeal than by a wholesale ideological realignment.

The sharp divergence between ruling and opposition prospects highlights an asymmetric electoral environment, where voter confidence appears concentrated around a single political figure rather than distributed across competing policy visions.

International Endorsement Raises Election Stakes

The election has also drawn unusual international attention following a public endorsement from Donald Trump. In a post on Truth Social, Trump announced plans to meet Takaichi on March 19 and offered a “complete and total endorsement” of her and the ruling coalition. While such statements carry no formal influence on Japanese voters, they add symbolic weight and global visibility to the contest.

This endorsement functions more as a signaling effect than a direct driver of electoral outcomes. It reinforces Takaichi’s image as a leader with strong international ties, but domestic approval ratings remain the more decisive factor shaping voter behavior.

Personal Popularity Drives Electoral Momentum

Takaichi has framed the snap election as a personal referendum, pledging to resign if the ruling coalition fails to secure a majority. With high personal approval ratings, the conservative prime minister is seeking to translate individual popularity into broad-based electoral gains for the LDP. Analysts note that this strategy relies on voter confidence in leadership rather than improvements in Japan’s economic conditions.

Kristi Govella of the Center for Strategic and International Studies previously observed that a clear victory would primarily reflect Takaichi’s personal standing, noting that little has changed economically since the LDP’s poor showing in mid-2025. This suggests a correlation between leadership perception and electoral success, rather than a causal link tied to macroeconomic recovery.

As Japan approaches election day, markets and political observers alike are bracing for heightened volatility. A landslide victory would not only redefine the balance of power in Tokyo but also cement Takaichi’s authority at a critical juncture, transforming a snap election into a decisive mandate for governance rather than a short-term political gamble.

Source: CNBC

To stay updated on all economic events of today, please check out our Economic calendar

Risk Warnings and Disclaimers

Add to Favorites

Gerik

Economic

Policy Pause Reflects Stabilizing Macroeconomic Conditions

The Reserve Bank of India on Friday held its benchmark policy rate steady at 5.25%, in line with market expectations. Economists surveyed by Reuters had widely anticipated this outcome following an aggressive easing cycle in 2025, during which the RBI delivered cumulative rate cuts of 125 basis points. The decision suggests that policymakers now see less urgency to stimulate demand further through monetary easing.

RBI Governor Sanjay Malhotra emphasized that while external headwinds have intensified, the successful conclusion of trade deals with the U.S. and the EU has improved the broader economic outlook. This framing indicates a causal relationship between improved trade visibility and the central bank’s confidence in maintaining policy stability, rather than a purely domestic inflation driven decision.

Trade Deals Reduce External Growth Risks

The RBI’s assessment comes shortly after the U.S. confirmed a reduction in tariffs on Indian exports to 18%, a sharp reversal from the earlier 50% levy that had raised concerns about growth headwinds. This shift has eased pressure on India’s export outlook and reduced uncertainty around external demand, which the central bank had flagged as a risk in previous policy meetings.

The improvement in trade relations acts as a stabilizing factor rather than an immediate growth catalyst. While lower tariffs support export competitiveness, their impact on growth is expected to materialize gradually. As a result, the RBI’s decision reflects correlation between improving external conditions and reduced downside risks, rather than a direct short-term boost to output.

Focus Shifts to Transmission of Past Rate Cuts

With policy rates now on hold, attention is turning toward the effectiveness of earlier easing measures. The RBI indicated it will remain proactive in liquidity management to ensure sufficient funds within the banking system and support monetary policy transmission. Governor Malhotra highlighted the need to align financial conditions with the productive requirements of the economy, signaling a greater emphasis on operational tools rather than further headline rate changes.

Radhika Rao of DBS Bank noted that the central bank’s guidance appeared balanced, pointing toward a prolonged pause. Expectations of open market operations in the coming quarters suggest that liquidity injections, rather than rate cuts, will be the primary mechanism for influencing financial conditions. This reflects a causal link between bond market dynamics and policy implementation, as liquidity measures are used to offset constraints in credit transmission.

Bond Supply and Borrowing Shape Rate Outlook

Longer-term yields are expected to remain under pressure as bond supply rises. India plans to borrow 17.2 trillion rupees in the financial year starting April 1, an 18% increase from the revised estimate for the current year and above market expectations. This increased issuance is likely to limit downward movement in long-term yields, particularly as banks and insurance companies scale back purchases of government securities.

According to Goldman Sachs, the RBI is signaling a “lower for longer” rate environment. Its chief India economist suggested rates could remain unchanged for at least a year, with only a limited chance of further cuts under current conditions. This outlook reflects a correlation between fiscal borrowing needs and constrained monetary flexibility, rather than a deterioration in growth fundamentals.

Growth and Inflation Provide Policy Comfort

India’s economic outlook remains robust. Official projections indicate growth of 7.4% in the fiscal year ending March 2026, followed by expansion between 6.8% and 7.2% the year after. These figures reinforce India’s position as the world’s fastest growing large economy and provide the RBI with confidence to pause without jeopardizing momentum.

Inflation dynamics further support this stance. Consumer inflation rose modestly to 1.33% in December from 0.71% previously, remaining well below the central bank’s comfort threshold. The RBI expects inflation to average 2.1% in the current financial year, only marginally higher than earlier estimates. Stable food supply conditions and contained core inflation suggest that price pressures are unlikely to constrain policy in the near term.

Overall, the RBI’s decision to hold rates reflects a strategic pause rather than a shift toward tightening. Improved trade conditions, strong growth forecasts, and subdued inflation together create a policy environment where stability is preferred over further stimulus, with liquidity management taking center stage as the main policy lever.

Source: CNBC

To stay updated on all economic events of today, please check out our Economic calendar

Risk Warnings and Disclaimers

Add to Favorites

Gerik

Economic

Commodity

Extreme Volatility Undermines Short-Term Price Discovery

According to CNBC, silver’s recent trading behavior reflects an unusually unstable market environment, with near-term volatility now exceeding 100%. This level of fluctuation suggests that prices are no longer being guided primarily by incremental changes in supply and demand, but instead by rapid shifts in positioning and sentiment. Since the start of the year, silver has experienced 11 separate price moves of 5% or more in either direction, an intensity that has severely weakened confidence among both institutional and retail participants.

Such repeated large swings make it difficult for the market to establish a reliable reference point for value. When volatility remains elevated for an extended period, price discovery becomes distorted, as participants hesitate to commit capital, reinforcing thin liquidity and amplifying subsequent moves.

Loss of Confidence Signals a Search for the Bottom

The question of where silver might find a bottom is less about identifying a specific price level and more about determining when volatility begins to subside. The current environment suggests that downside pressure is being driven not only by selling itself but also by the withdrawal of liquidity. As confidence deteriorates, market participants reduce position sizes, which increases sensitivity to marginal trades and creates exaggerated price responses.

This dynamic reflects a correlation between volatility and declining market depth rather than a direct causal link to a single macroeconomic trigger. In other words, silver’s instability is being intensified by the structure of the market rather than a sudden collapse in its fundamental use or long-term demand profile.

Short-Term Risks Dominate Despite Supportive Fundamentals

Major banks have acknowledged that near-term risks for silver remain skewed to the downside as long as volatility stays elevated. Sharp price swings discourage hedging activity and reduce the willingness of long-term investors to step in, delaying the formation of a durable base. This assessment reflects a short-term risk environment shaped by sentiment, leverage, and liquidity conditions rather than a reassessment of silver’s intrinsic role in the global economy.

At the same time, banks emphasize that longer-term fundamentals remain broadly supportive. Silver continues to benefit from its dual role as both an industrial metal and a store of value, particularly in sectors linked to energy transition technologies. This relationship is correlational rather than causal in the short run, meaning that supportive fundamentals do not automatically translate into price stability when speculative forces dominate trading behavior.

What Defines a Sustainable Bottom for Silver

A meaningful bottom is likely to emerge only when volatility compresses and price movements narrow into more consistent ranges. Historically, sustained recoveries in silver have followed periods where extreme swings gave way to calmer trading, signaling that forced selling and rapid position unwinding had largely run their course. Until such conditions materialize, attempts to identify a precise price floor remain speculative.

In this context, the market’s focus is shifting from price levels to volatility metrics themselves. A decline in the frequency of 5% daily moves may offer a more reliable signal of stabilization than any single support threshold. Until then, silver’s path is likely to remain erratic, reflecting a market still searching for equilibrium rather than one anchored by stable demand and supply dynamics.

Source: CNBC

To stay updated on all economic events of today, please check out our Economic calendar

Risk Warnings and Disclaimers

Add to Favorites

Gerik

Economic

Silver Volatility Intensifies Under Thin Market Conditions

According to Bloomberg, silver once again demonstrated its vulnerability to liquidity shocks, plunging nearly 10% before rebounding sharply within the same trading session. Early Asian trading saw spot silver tumble toward $64 an ounce, only to reverse course and rise as much as 3.5%. This followed a dramatic 20% drop in the previous session, a move that erased all gains accumulated during January’s powerful rally. Despite the rebound, silver remains down roughly 40% from its all time peak reached on January 29, underlining the severity of the correction.

Gold showed relatively greater resilience, reversing earlier losses to post gains on Friday. This divergence reflects structural differences between the two metals rather than a fundamental shift in investor sentiment toward precious metals as a whole.

Structural Liquidity Gaps Drive Extreme Price Swings

Silver has historically exhibited sharper price movements than gold due to its smaller market size and thinner liquidity base. However, recent fluctuations stand out even by historical standards, marking the most volatile period since 1980. The speed and magnitude of the moves suggest more than routine volatility, pointing instead to a feedback loop between speculative positioning and deteriorating market depth.

As volatility rises, market makers typically widen bid ask spreads and reduce balance sheet exposure. This behavior weakens liquidity precisely when demand for it increases, creating a self reinforcing cycle in which price instability begets further instability. The result is a market environment where relatively modest flows can trigger outsized price reactions.

Speculative Positioning Unwinds After January Surge

The sharp reversal follows a multiyear bull run in precious metals that accelerated last month. That rally was supported by heightened geopolitical tensions, concerns surrounding the Federal Reserve’s institutional independence, and strong speculative participation, particularly from China. Investors accumulated significant exposure through leveraged exchange traded products and call options, amplifying upside momentum during January.

This positioning proved fragile. Silver recorded its largest ever single day drop on January 30, while gold suffered its steepest decline since 2013. Since then, trading conditions have remained highly unstable, reflecting a market in the process of rapidly shedding risk.

Chinese Demand Retreats and Removes Key Support

A notable contraction in Chinese buying over the past week has further undermined silver’s ability to stabilize. Open interest on Shanghai Futures Exchange silver contracts has fallen to the lowest level in a year, signaling widespread position unwinding rather than short term profit taking. Seasonal factors have compounded this effect, as investors traditionally reduce exposure ahead of the Lunar New Year holiday beginning February 16.

Chinese silver prices have also shifted to a discount relative to international benchmarks. This development suggests weaker domestic demand rather than purely global price pressure, reinforcing the idea that the recent selloff reflects both structural and regional dynamics.

Gold Holds Firm While Confidence in Hedging Shifts

Compared with silver, gold’s deeper and more liquid market has absorbed the volatility more effectively. Several banks and asset managers reiterated bullish long term views on gold during the week, emphasizing its structural role in portfolios. Some institutional investors who exited positions before the selloff have indicated readiness to reenter once conditions stabilize, and major asset managers continue to see gold’s longer term upward trend as intact.

At the same time, the extreme volatility across precious metals has prompted renewed debate about their effectiveness as risk hedges. In a notable departure from traditional Wall Street thinking, strategists at JPMorgan Chase suggested that Bitcoin may offer a more attractive long term alternative to gold, a view that underscores evolving perceptions of safe haven assets.

Broader Market Snapshot

As of 10:45 a.m. in Singapore, spot silver was up 1.9% at $72.28 an ounce, while gold rose 0.9% to $4,823.44. Platinum and palladium remained under pressure, extending recent losses. The Bloomberg Dollar Spot Index was broadly unchanged, indicating that currency movements were not the primary driver of precious metals volatility. Meanwhile, Bitcoin dropped 9.38%, falling below the $70,000 threshold and adding to the sense of cross market instability.

Taken together, recent price action suggests that liquidity conditions and positioning dynamics, rather than shifts in long term fundamentals, are dominating short term market behavior. Until liquidity improves and speculative exposure stabilizes, both precious metals and digital assets are likely to remain vulnerable to abrupt and amplified price swings.

Source: Bloomberg

To stay updated on all economic events of today, please check out our Economic calendar

Risk Warnings and Disclaimers

Add to Favorites

Gerik

Economic

Shift In Strategy As Yield Environment Changes

Japan’s biggest lenders are signaling a potential turning point in their long-standing retreat from Japanese government bonds. After years of reducing exposure due to ultra-low interest rates, both Mitsubishi UFJ Financial Group and Sumitomo Mitsui Financial Group say they are ready to rebuild JGB holdings as rising yields begin to offer more attractive returns.

Over the past decade, the banks had steadily trimmed their bond portfolios because returns were compressed under the Bank of Japan’s prolonged accommodative policy. That backdrop is now shifting, as higher interest rates improve the income outlook for government debt, prompting management teams to reassess their positioning.

Recent Yield Volatility And Market Stabilization

JGB yields climbed sharply from November, a move linked to fiscal expansion expectations following spending plans outlined by Prime Minister Sanae Takaichi. The surge weighed on bond valuations, pushing unrealized losses higher across bank balance sheets. However, market conditions have calmed in recent weeks.

Demand at the last four government debt auctions has been resilient, and the 30-year JGB yield has fallen by 32 basis points from its January 20 record high of 3.88%. This easing has helped stabilize expectations and reduced immediate pressure on bond prices.

Takayuki Hara, managing director and head of the CFO office at MUFG, said the bank would move carefully but sees scope to rebuild positions as long-term rates show signs of peaking.

Unrealized Losses Remain A Key Constraint

Despite the improved outlook, valuation losses remain substantial. MUFG reported unrealized losses of 200 billion yen on its bond portfolio at the end of the year, sharply higher than the 40 billion yen recorded at the end of March. The bank noted that sales of longer-duration bonds between September and December helped limit further damage.

SMFG faces a similar situation. Its unrealized losses on JGBs more than doubled to 98 billion yen over the nine months to December. Management acknowledged the impact of rising yields on bond prices but emphasized plans to increase holdings gradually while monitoring market conditions.

The experience highlights a structural challenge for banks: when yields rise, bond income improves over time, but the immediate effect is a decline in the market value of bonds purchased at lower rates. This relationship is a valuation effect rather than a deterioration in credit quality.

Duration Strategy And Cautious Re-Entry

In recent years, Japan’s megabanks have favored short-duration bonds to limit interest rate risk. Mizuho Financial Group, the third-largest lender, reported an average remaining maturity of just 1.8 years for its JGB holdings at the end of December.

Analysts expect this cautious stance to persist in the near term. Further rate hikes by the Bank of Japan and concerns over Japan’s large public debt load could still push yields higher, making banks reluctant to add longer-duration exposure too quickly.

Some market participants see a clearer entry point later. Toshinobu Chiba of Simplex Asset Management said the JGB yield curve could continue to rise, with the 10-year yield potentially reaching 2.5%, compared with its current level of around 2.195%. Such a move could offer a more compelling risk-return balance for banks.

Earnings Momentum Supported By Higher Rates

The broader rate environment has already boosted profitability across the sector. The Bank of Japan raised rates for the first time in 17 years in March 2024 and has delivered three additional hikes since, taking the policy rate to 0.75%. That shift has helped Japan’s megabanks forecast record profits for the current financial year.

Equity markets have reflected this improvement. The Topix banking index has doubled since the initial rate hike in March 2024, far outperforming the broader Topix index’s 33% gain.

Looking further ahead, analysts see scope for higher yields on longer-duration JGBs to support earnings growth. Goldman Sachs analyst Makoto Kuroda recently raised profit forecasts for the 2028 financial year for MUFG, SMFG, and Mizuho, citing higher rates, stronger yields, and a weaker yen. Net profit estimates were lifted by 20%, 11%, and 21% respectively.

For Japan’s largest banks, the renewed interest in JGBs reflects a calculated trade-off. While unrealized losses remain a near-term headwind, management teams appear increasingly focused on the longer-term income potential of higher-yielding government bonds. If yields stabilize and policy tightening progresses gradually, JGBs may once again become a core pillar of megabank balance sheets, supporting earnings momentum in the years ahead.

Source: TradingView

To stay updated on all economic events of today, please check out our Economic calendar

Risk Warnings and Disclaimers

Add to Favorites

Recent Searches

Top Searches

Markets

News

Analysis

User

24/7

Economic Calendar

Education

Data

Bitcoin Slumps 9% as Tech Rout Ripples Through Asian Markets

Wall Street Tech Losses Set A Risk-Off Tone

Bitcoin Gives Back Post-Election Gains

Asian Markets Track Global Sentiment

AI Spending Concerns Hit Big Tech

Precious Metals And Commodities Remain Volatile

Source: CNBC

Asian Equities Slide as Tech Rout Extends and Indonesia Slumps on Credit Outlook Shock

Tech Weakness Spills Across Asian Markets

AI Developments Add To Sector Anxiety

Indonesia Hit By Credit Outlook Downgrade

Bond Markets And Policy Response In Focus

Takaichi Seeks Overwhelming Mandate as Polls Signal Japan Snap Election Landslide

Polls Point To Dominant Ruling Coalition Victory

Legislative Control Becomes the Central Prize

Opposition Faces Severe Seat Losses

International Endorsement Raises Election Stakes

Personal Popularity Drives Electoral Momentum

Source: CNBC

RBI Signals Policy Pause at 5.25% as Trade Breakthroughs Reinforce India’s Growth Outlook

Policy Pause Reflects Stabilizing Macroeconomic Conditions

Trade Deals Reduce External Growth Risks

Focus Shifts to Transmission of Past Rate Cuts

Bond Supply and Borrowing Shape Rate Outlook

Growth and Inflation Provide Policy Comfort

Source: CNBC

Silver Volatility Breaks the 100% Mark as Markets Search for a Price Floor

Extreme Volatility Undermines Short-Term Price Discovery

Loss of Confidence Signals a Search for the Bottom

Short-Term Risks Dominate Despite Supportive Fundamentals

What Defines a Sustainable Bottom for Silver

Source: CNBC

Liquidity Shock Sends Silver Into Extreme Volatility While Bitcoin Slides Below $70,000

Silver Volatility Intensifies Under Thin Market Conditions

Structural Liquidity Gaps Drive Extreme Price Swings

Speculative Positioning Unwinds After January Surge

Chinese Demand Retreats and Removes Key Support

Gold Holds Firm While Confidence in Hedging Shifts

Broader Market Snapshot

Source: Bloomberg

Japan Megabanks Signal Return to JGBs as Yield Outlook Improves Despite Valuation Losses

Shift In Strategy As Yield Environment Changes

Recent Yield Volatility And Market Stabilization

Unrealized Losses Remain A Key Constraint

Duration Strategy And Cautious Re-Entry

Earnings Momentum Supported By Higher Rates

Source: TradingView

Risk Disclosure