SMFG

(Bloomberg) -- Chinese tech firms’ early earnings are giving hardware stocks renewed momentum, while internet platforms still struggle to show a full consumer‑demand recovery. Most Read from Bloomberg Selena Gomez Accused of Fraud by Mental-Health Startup Investors Anthropic in Talks to Buy AI Startup Decart for $6 Billion Walter Sells Lakers, Seeks More Cash to Pay Loans Amid DOJ Probe Phoebe Gates Knew Phia Shopping App Took Credit for Sales It Didn’t Drive Costliest US Bond Sale Since 2001 Is Investor Warning to Bessent Shares of Semiconductor Manufacturing International Corp. climbed as much as 6.4% in Hong Kong on Friday after the chipmaker reported earnings that beat estimates and a stronger-than-expected gross margin outlook. But online retailer JD.com Inc. fell more than 10% after posting its first quarterly revenue decline since listing in 2014. Along with Meituan, JD.com was among the biggest drags on the Hang Seng Tech Index, which slid 1.6%. Since late June, investors have increasingly shifted into internet and e-consumer stocks as the AI rally cooled, reversing first‑half trends. Early reads on this week’s earnings point to their preference toward AI stocks possibly regaining strength, pressuring internet shares as more results come due. “Investors generally believe spending in AI hardware by Chinese firms will continue to grow, hence funds are switching out from non-AI names, e.g. JD, despite strong bottom-line growth and share price dips,” said Stanley Tang, senior portfolio manager at Sumitomo Mitsui DS Asset Management. Further underscoring investors’ durable appetite for AI hardware stocks, newly listed memory-chip maker CXMT Corp. on Thursday overtook internet giant Tencent Holdings Ltd. as the world’s most valuable Chinese company. Chinese internet firms also have vowed heavy AI spending, but their post‑earnings stock performance partly shows concerns about the pace of such investments. Tencent’s shares fell Thursday despite reporting solid growth for advertising and mobile games, as Goldman Sachs Group Inc. analysts noted that AI spending was higher than expected. Not all hardware stocks did well. Hua Hong Grace Semiconductor Ltd. plunged Friday after a profit miss. Meituan and Baidu Inc. may provide the next major test of whether investors rotate back into internet stocks, or keep favoring AI-linked players, with earnings expected on Friday and Aug. 18, respectively. Most Read from Bloomberg Businessweek The Optimization Backlash Has Begun AI Music Startup Suno Bets Anyone Can Be a Rock Star The Midwest City Keeping the American Dream Alive for First-Time Homebuyers The Steamy, Magical and Now Very Lucrative Romantasy Business With EV Sales Slowing, Hybrid Cars Are Hot Again ©2026 Bloomberg L.P.

Find winning stocks in any market cycle. Join 7 million investors using Simply Wall St's investing ideas for FREE. Sumitomo Mitsui Financial Group stock has delivered a very large 5 year return while the valuation signals are split, with the Excess Returns intrinsic value model pointing to meaningful upside and the market multiple checks painting a more demanding picture. Over the past 5 years the stock has returned about 7x, which puts extra focus on whether that gain is now fully reflected in the price. SMBC's recent equity commitment to Canal Road Group's direct lending strategy can support expectations for fee and interest income, while the added exposure to a larger lending book may increase sensitivity to credit and funding risks. The company clears only 2 of 6 valuation checks, which suggests Sumitomo Mitsui Financial Group is not a straightforward bargain on the broader metrics even though the intrinsic value estimate signals the stock is undervalued. The issue now is whether the current share price fully reflects Sumitomo Mitsui Financial Group's intrinsic value or still leaves a margin between market price and what the Excess Returns model implies. Sumitomo Mitsui Financial Group delivered 92.5% returns over the last year. See how this stacks up to the rest of the Banks industry. The Excess Returns model evaluates how much profit Sumitomo Mitsui Financial Group can generate on its equity above the return that shareholders require, and then capitalizes that surplus into an intrinsic value per share. In this framework, the current inputs point to an estimated intrinsic value of ¥10,059 per share, which sits above the recent market price and implies the stock is 28.3% undervalued. For Sumitomo Mitsui Financial Group, the model uses a stable EPS of ¥549.41 per share and a book value of ¥4,154.43 per share, supported by an average return on equity of 11.45%. With a cost of equity of ¥282.19 per share, the resulting excess return of ¥267.22 per share is then applied to a stable book value estimate of ¥4,799.04 per share to arrive at that intrinsic value. The recent equity commitment to Canal Road Group's direct lending strategy helps explain why the market may be assigning a premium P/E, yet still leaves the share price below the level implied by this earnings and return profile. On this model, Sumitomo Mitsui Financial Group stock currently screens as undervalued relative to its estimated intrinsic value. Our Excess Returns analysis suggests Sumitomo Mitsui Financial Group is undervalued by 28.3%. Track this in your watchlist or portfolio, or discover 19 more high quality undervalued stocks. Head to the Valuation section of our Company Report for more details on how we arrive at this Fair Value for Sumitomo Mitsui Financial Group. P/E is a useful cross check for Sumitomo Mitsui Financial Group because earnings are a primary driver of value for a large bank. The stock currently trades at a P/E of 24.1x, which sits above the Banks industry average of 16.6x and also above the peer group average of 19.9x. That puts Sumitomo Mitsui Financial Group at a clear premium to many listed banks. A tailored fair P/E ratio that factors in the company’s profile is 18.7x, so the current 24.1x level is meaningfully higher than what this framework suggests. The roughly 5.4 turn gap between the market multiple and this fair P/E indicates investors are paying more for Sumitomo Mitsui Financial Group stock relative to what these inputs would imply. On the P/E multiple, Sumitomo Mitsui Financial Group currently screens as overvalued compared with both its fair ratio and banking peers. See what the numbers say about this price — find out in our valuation breakdown. Simply Wall St Narratives for Sumitomo Mitsui Financial Group pick up where this valuation puzzle leaves off by explaining which paths for the bank's growth, margins and earnings would need to occur for the stock to be worth materially more or less than it is today. Rather than giving a single figure, they unpack the assumptions that sit behind that number so you can watch over time whether those conditions actually hold. Narratives sit on Simply Wall St's Community page and are designed to make the trade offs behind Sumitomo Mitsui Financial Group's valuation easier to follow and question as new information comes through. If you have a number driven view on whether Sumitomo Mitsui Financial Group's equity commitment to Canal Road Group's direct lending strategy delivers for shareholders, share a Narrative in the Simply Wall St community and spell out the case. It is a chance to add your voice on the stock and see how your thesis stands up as new results and updates arrive. Do you think there's more to the story for Sumitomo Mitsui Financial Group? Head over to our Community to see what others are saying! For Sumitomo Mitsui Financial Group, the Excess Returns intrinsic value estimate points to meaningful upside, while the P/E and wider checks flag the stock as overvalued on market multiples. That gap largely reflects how differently the models treat funding needs and capital intensity on one side, and higher growth expectations and sentiment on the other, especially after such a strong multi year move. With broader valuation checks coming through as weak, the key question is whether earnings and returns can support today’s premium multiple, or whether the market is correctly pricing in the added credit and funding risks from a larger lending book. This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned. Companies discussed in this article include 8316.T. Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email [email protected]

The major indexes capped of a second straight stretch of weekly losses as investors digested a wave of geopolitical headlines and navigated what remains an unsettled trading environment to start 2026. The S&P 500 (^GSPC) barely cracked above the flat line by less than 0.1% on Friday, losing 0.4% in total on the week, and the Dow Jones Industrial Average (^DJI) fell into the red by 0.7% on the week. Despite finishing Friday on a gain of 0.3%, the tech-focused Nasdaq Composite (^IXIC) also fell into the red for the week, shedding roughly 0.1% in total. The breakout price action for the week came in the natural gas (NG=F) market, where futures spiked 75% in the five trading sessions leading up to Thursday as Winter Storm Fern brings Arctic cold and snow to more than 150 million people across the US. The biggest headlines last week emerged from the world leaders and business luminaries who gathered in Switzerland for the World Economic Forum in Davos. President Trump and Europe's leaders agreed on the "framework" of a deal over Greenland, but the forum revealed the schism forming between the US and some of its major Western allies. Currencies have largely taken a back seat to stocks since the post-pandemic market rally took hold and investors focused on earnings growth, AI-driven optimism, and the steady resilience of US equities. But that may be starting to change, according to Macquarie global FX & rates strategist Thierry Wizman. "While a Greenland 'deal' solves the immediate problem of tariffs and/or invasion, it doesn't solve the core issue of the seeming mutual alienation of the US from its allies," Wizman wrote in a note to clients on Wednesday. "It's in that spirit that we can still talk about a fracturing, more dangerous, world, in which the US is less vaunted, the USD loses its reserve currency status, and where the US focuses instead on the Western Hemisphere as its sole and defendable redoubt." And while the US backed off tariff threats over Greenland, and the EU suspended a package of retaliatory trade measures, investors still appear keen to find safe haven outside of the dollar. Over the past five days, EUR/USD, the most traded FX pair in the world, has picked up nearly 2% as the euro has strengthened against the dollar. At the same time, the dollar has fallen more than 2.7% against the Swiss franc, a sign of traders hedging against systemic instability. The dollar also fell roughly 1.8% against the yen as the Japanese currency surged through the end of the week. Investors will turn their attention ahead to one of the busiest weeks of the year, with the Federal Reserve's January meeting on Wednesday coming alongside a slew of key earnings reports, including releases from four of the "Magnificent Seven" cohort. Microsoft (MSFT), Meta (META), Tesla (TSLA), and Apple (AAPL) are all queued up to report fourth quarter results — the first three companies report Wednesday after the close, while Apple goes after Thursday's bell — with investor attention likely to remain centered on AI spending and these companies' ambitions in this new paradigm. On the central banking front, investors are nearly certain the Federal Reserve will hold rates steady in their current range of 3.5%-3.75%. As of Friday, data from the CME Group showed traders assigning a 97% chance the Fed holds rates on Wednesday. The bigger news for the Fed, most likely, will be any further developments on President Trump's pick for the next Fed chair after Powell finishes his term in the position in May. According to odds on Polymarket as of Friday afternoon, BlackRock's global CIO for fixed income, Rick Rieder, has been rising quickly as a prospect and has become the favorite to earn the nod from Trump. Former Fed official Kevin Warsh and Trump's top economic advisor, Kevin Hassett, who had long been seen as the leading candidates for the nomination, stood at 33% and 6% odds, respectively, as of Friday afternoon. Speaking with CNBC in Davos, Trump said he thought Rieder was "very impressive." When two of the market's biggest tech giants report earnings on Wednesday, investors will be watching for two things: How much are these companies planning to spend on their AI and cloud computing arms race, and how are they planning to fund it? Meta CFO Susan Li boosted spending projections from a range of $66 billion-$72 billion to between $70 billion and $72 billion on the company's third quarter call in October, while Microsoft CFO Amy Hood said the company would spend more in 2026 than the $88.2 billion it spent in 2025. Both companies will report results after the close on Wednesday. Amazon and Alphabet are expected to report in the first week of February. To fund this investment, hyperscalers are now issuing so much debt they are changing the landscape of investment-grade credit, Apollo chief economist Torsten Sløk wrote in a note on Friday. The tech sector issued nearly $700 billion in investment-grade debt over the past quarter, closing in on the just-over $800 billion in issuance by the financial sector, which has long led the credit market. (Disclosure: Yahoo Finance is owned by Apollo Global Management.) While the share of people citing an "AI bubble" is falling, Bank of America strategists Haim Israel and Menka Bajaj wrote in a recent client note that investors can't not consider the risks of bottomless spending and sky-high valuations. "AI is a fundamental revolution that is about to change everything, but we cannot ignore valuation debate and timing," the strategists wrote. The tech sector is also having to navigate the fickle winds of public opinion, especially around the data center build-out that is sucking up so much cash. Rising energy costs, heavy water usage, job security, and other concerns have all risen to the forefront, Jefferies strategists wrote in a client note on Friday — with ratepayer electricity bills perhaps chief among them. "AI investments sit directly in the cross-hairs of the ongoing debate around affordability," the Jefferies strategists wrote. For the tech companies getting ready to share their first major spending projections of 2026, the question will be: Can that spending be converted into legitimate productivity gains and other real-world benefits, or will it all fall into, as Israel and Bajaj wrote, "mere hype"? In a market swirling with geopolitical turmoil — from Venezuela and Iran to Greenland and US-European tensions — metals have continued to dominate conversation, perhaps nowhere more prominently than in gold (GC=F). Gold prices continued to rise on Monday, surpassing $5,000 an ounce. Futures hit a record on Sunday as analysts began to question the massive rally for the precious metal. Gold had picked up just under 8% last week to top $4,900 per troy ounce for the first time ever on Thursday, prompting Goldman Sachs to raise its year-end price target to $5,400. Silver (SI=F), too, has kept its rally going as investors flock to flight-to-safety investments, pushing the white metal past $100 per troy ounce. And platinum (PL=F), a diversifier for store-of-value assets, has — like silver — already surged upward by more than 30% this year. Analysts have pegged the rally to the dollar's weakening position in an increasingly fractious global risk environment, sputtering demand for government debt, and expectations that the Fed is likely to keep easing policy. "It used to be the case that any eruption of geopolitical tension tended to rally the world around the US dollar," wrote Macquarie's Wizman in a client note on Friday. "But what is happening now is different. Instead of flocking to the USD, traders flock to gold and its neighbors on the periodic table (e.g., silver, platinum) and defense stocks, and the USD has little to show for its erstwhile vauntedness." The metals rally has also continued on the industrial side, where a combination of supply chain politics and market fundamentals has kept prices rising. Copper futures (HG=F), which returned more than 30% in 2025, have picked up nearly 4% in 2026 as data center-driven demand continues. Spot prices on lithium, crucial to the EV build-out but largely controlled by China, have risen an even stronger 44% on the year, while tin has surged by nearly 30%, according to data from Trading Economics. And demand is only expected to grow as Big Tech doubles down on its plans for mass build-outs of data centers and other AI infrastructure. Despite a tough macroeconomic backdrop, writes HSBC metals analyst Jonathan Brandt, most metals prices are at or close to record levels, and "supply constraints and strong demand from energy transition and AI should support most metal markets in 2026." The metals market, Brandt wrote, is facing a perfect storm of demand for safe-haven assets, trade restrictions and production caps, and underinvestment that left the sector unprepared for this massive demand surge. "The combination of these factors could lead to a 'super-cycle' in select metals, with prices potentially staying well above the historical average for the foreseeable future." Economic data: Chicago Fed national activity index, November (-0.21 previously); Durable goods orders, November (+3% expected, -2.2% previously); Dallas Fed manufacturing activity, January (-10.9 previously) Earnings calendar: Southern Copper (SCCO), Nucor (NUE), Ryanair Holdings (RYAAY), Brown & Brown (BRO), Steel Dynamics (STLD), W.R. Berkley (WRB), Graco Inc. (GGG), AGNC Investment (AGNC), Crane (CR), Western Alliance Bancorporation (WAL) Economic data: ADP weekly employment change, week ended Jan. 3 (+8,000 previously); FHFA house price index, month-on-month, November (+0.4% previously); Richmond Fed manufacturing index, January (-7 previously); Conference Board consumer confidence, January (90.0 expected, 89.1 previously); Dallas Fed services activity, January (-3.3 previously) Earnings calendar: UnitedHealth (UNH), RTX (RTX), Boeing (BA), NextEra Energy (NEE), Texas Instruments (TXN), Union Pacific (UNP), HCA Healthcare (HCA), Northrop Grumman (NOC), UPS (UPS), General Motors (GM), Seagate Technology (STX), Sysco (SYY), Kimberly-Clark (KMB), Nextpower (NXT), Invesco (IVZ), American Airlines (AAL) Economic data: FOMC rate decision, Jan. 28 (no change expected); MBA mortgage applications, week ended Jan. 23 (14.1% previously) Earnings calendar: Microsoft (MSFT), Meta Platforms (META), Tesla (TSLA), ASML Holdings N.V. (ASML), Lam Research Corporation (LRCX), IBM (IBM), Amphenol (APH), GE Vernova (GEV), Danaher (DHR), AT&T (T), ServiceNow (NOW), Progressive (PGR), Starbucks (SBUX), Automatic Data Processing (ADP), General Dynamics (GD), Waste Management (WM), Elevance Health (ELV), Corning (GLW), MSCI (MSCI), Las Vegas Sands (LVS), Southwest Airlines (LUV), Levi Strauss (LEVI) Economic data: Initial jobless claims, week ended Jan. 24 (200,000 previously); Continuing claims, week ended Jan. 17 (1.85 million previously); Trade balance, November (-$45 billion expected, -$29.4 billion previously); Factory orders, November (-1.3% previously) Earnings calendar: AAPL (AAPL), Visa (V), Mastercard (MA), Caterpillar (CAT), SAP SE (SAP), Thermo Fisher Scientific (TMO), KLA Corporation (KLAC), Blackstone (BX), Honeywell International (HON), Lockheed Martin (LMT), Stryker (SYK), Parker-Hannifin (PH), Comcast (CMCSA), Sanofi (SNY), Altria (MO), Marsh & McLennan (MSN.DU), Sherwin-Williams (SHW), Trane Technologies (TT), Deutsche Bank (DB), Royal Caribbean (RCL), Sandisk (SNDK), L3Harris Technologies (LHX), Norfolk Southern (NSC), Valero Energy (VLO), Brookfield Infrastructure Partners L.P. (BIP), Deckers Outdoor (DECK) Economic data: Producer price index, month-on-month, December (+0.3% expected, +0.2% previously); PPI, ex food and energy, month-on-month, December (+0.3% expected, 0% previously); PPI, year-on-year, December (+3% previously); PPI, ex food and energy, year-on-year, December (+3% previously) Earnings calendar: Exxon Mobil (XOM), Chevron (CVX), American Express (AXP), Verizon (VZ), Sumitomo Mitsui Financial Group (SMFG), Regeneron Pharmaceuticals (REGN), Aon (AON), Colgate-Palmolive (CL), Canadian National Railway (CNI), Air Products and Chemicals (APD), Imperial Oil (IMO), SoFi Technologies (SOFI), Charter Communications (CHTR), Nomura (NMR), Franklin Resources (BEN), Janus Henderson (JHG) Click here for in-depth analysis of the latest stock market news and events moving stock prices Read the latest financial and business news from Yahoo Finance

Pre-markets are down again in early trading today, now down for the week — just a day and a half from the blue-chip Dow setting a new all-time closing high. A plurality of Fed members have by now spoken up this week doubting that 25 basis-point (bps) cuts will continue indefinitely, mostly because there is almost no visibility on economic metrics with a six-week government shutdown — the longest in U.S. history. Today was supposed to bring us October Retail Sales, which were predicted to have turned negative for the first time in four months, following gains of +1.0%, +0.6% and +0.6% sequentially. Also, the Producer Price Index (PPI) — the wholesale side of inflation — was estimated to grow +0.3% for the month, from -0.1% reported at its most recent release, for August. Year over year PPI was +2.6% in August, down from +3.1% in July. Will we see this downtrend continue? If we do — and especially if we see continued weakness in the labor market (eventually) — then we can expect 25 bps interest rate cuts to continue. We did get an alternate print on Weekly Jobless Claims this morning, with Initial Claims unchanged week over week to 228K and Continuing Claims coming down -18K to 1.95 million. None of this data seems to be capturing the uncommonly high number of layoffs reported over the past couple weeks, so we won’t bet the farm on this data just yet. All told, the Dow is -345 points at this hour, -0.73%, while the S&P 500 is -75, -1.12%. The Nasdaq continues to fare the worst — the dark clouds over possibly excessive AI spending have not yet parted — -394 points, -1.57%, while the small-cap Russell 2000 is -32, -1.37%. At this stage, we’re on pace for the worst November of trading since 2008. Two Japanese finance majors reported fiscal Q2 results this morning. Zacks Rank #2 (Buy)-rated Mitsubishi UFJ MUFG beat on earnings by a solid dime: 44 cents per ADR versus expectations for 34 cents, for a +1.3% positive surprise. Zacks Rank #3 (Hold)-rated Sumimoto SMFG did one better, reporting 59 cents per ADR versus 40 cents anticipated, for a positive surprise of +47.5%. Both stocks are up in early trading on the news. The Business Inventories report expected later this afternoon? Forget it. We will hear from a couple more Fed members today on the state of the economy — Kansas City Fed President Jeff Schmid and Dallas Fed President Lorie Logan — but unless these officials pull a 180 and suddenly support more rate cuts, expect more discussion regarding why it may be wiser to keep rates steady at their current +3.75-4.00%. Both have said they were against the cut in October, even though neither were voting members. Those rooting for more rate cuts may think they only have a half-year or so of wallowing through Fed Chair Jerome Powell’s tenure, including his continued reiteration that Fed policy is still keeping a +2% inflation rate as a target. This notion will evaporate upon a new Fed Chair taking the mantle, in May 2026, but as we can see above, he (or she) would experience lots of resistance from its current members. Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Sumitomo Mitsui Financial Group Inc (SMFG) : Free Stock Analysis Report Mitsubishi UFJ Financial Group, Inc. (MUFG) : Free Stock Analysis Report This article originally published on Zacks Investment Research (zacks.com). Zacks Investment Research

(Bloomberg) -- The slump in Japan’s long-term bonds intensified Monday, pushing yields sharply higher in a move that puts global debt markets on alert. Most Read from Bloomberg Why Did Cars Get So Hard to See Out Of? How German Cities Are Rethinking Women’s Safety — With Taxis Advocates Fear US Agents Are Using ‘Wellness Checks’ on Children as a Prelude to Arrests Amid signs of thin liquidity and increasing worries about higher government spending in Japan, yields on bonds from the 10-year to the 40-year spiked in moves reminiscent of the surge that rippled through global markets in May. While the pressure in Japan is being heightened by the looming election on July 20, concerns over governments spending beyond their means also apply to the UK, Europe and US. Japan’s 40-year yield led the way, with a jump of 17 basis points in afternoon trading, while the 30-year yield neared the record high seen in May and the 20-year yield touched the highest since 2000. The rout in Japan’s debt market also followed a tumble in US Treasuries on Friday as worries about inflation re-emerged. In Germany on Monday, long-term borrowing costs were on course to hit their highest since 2011 amid concern over tariffs and extra government spending. “Government spending is huge,“ said Amir Anvarzadeh, Japan equity strategist at Asymmetric Advisors Pte. “Inflation is up, wages are up. At some point something has to give,” he said, adding that rising JGB yields are also a worry for stocks. Focus has intensified on the nation’s upper house election, with several local Japanese media polls pointing to the possibility the ruling bloc may lose its majority. Politicians have been wooing voters with promises of more government spending and tax cuts, which would increase the nation’s debt load. “There is a move to reduce risk ahead of the upper house election in the bond market,” said Miki Den, senior rates strategist at SMBC Nikko Securities. “With few buyers expected before the election and ongoing selling flows, super-long-term bonds are experiencing large price fluctuations and are being sold off.” What Bloomberg Strategists say: “Long-ended JGBs are selling off nastily yet again toward the end of Tokyo’s day and that’s casting a shadow on Europe’s morning by reemphasizing concerns that bond markets are fragile heading into critical US inflation data later this week” — Garfield Reynolds, MLIV Team Leader, Sydney. For the full analysis, click here. Yields also rose in response to a report from Bloomberg that Bank of Japan officials are likely to consider raising at least one of their inflation forecasts at a policy meeting later this month. “The fiscal concerns will continue to keep super-long bonds quite fragile,” said Shinichiro Kadota, head of Japan FX and rates strategy at Barclays Securities Japan Ltd. A surge in domestic interest rates also poses a potential headwind for Japan’s corporate bond market, which saw record volume in the first quarter of the new fiscal year through June. Higher yields translate directly into increased debt issuance costs for companies, raising concern that they may scale back yen bond offerings. This could also accelerate a shift toward offshore funding. In the sovereign debt market, a lack of liquidity in recent months has made bonds particularly vulnerable to sharp swings. A Bloomberg gauge that examines how far intraday yield levels deviate from fair value has surged since early April and is now well above the previous peak set during the global financial crisis in 2008. “The sharp rise in super-long yields show that the market is pricing in government fiscal risks to some degree,” said Yuichi Kodama, economist at Meiji Yasuda Research Institute. “But the impact on the real economy has not yet materialized.” Kodama emphasized that what’s more important is 10-year bond yields, which are linked to fixed mortgage rates and would have a significant impact on the real economy. The 10-year yield rose to 1.575%. Bank of Japan Governor Kazuo Ueda has said the nation’s super-long yields — which are generally thought of as those on the 20-year maturity and higher — have limited impacts on the real economy compared to shorter-term debt. Yet he has also said the will carefully monitor developments. “Ueda is currently downplaying the spike in super-long yields, but I’m sure he’s watching the situation closely,” Kodama said. “He’s avoiding explicit comments because any statement could be interpreted as signaling market intervention or as a threshold for intervention.” Atsushi Takeda, chief economist at Itochu Research Institute, said that businesses broadly don’t take on debt in the super-long end, meaning it has limited importance for the real economy. “But we are starting to see a rise in 10-year bond yields due to concerns over fiscal health and that’s something we must keep a close eye on,” Takeda said. While the result of the upper house election is hard to predict, “opposition parties are calling for a cut in the sales tax so if they win, fiscal anxiety will stay. If Ishiba’s LDP wins, investors are probably back to buying bonds.” This year Japan allocated about a quarter of its initial budget to debt-servicing costs, totaling ¥28.2 trillion ($191 billion). The country has a debt-to-GDP ratio of 250% according to the IMF, the largest among developed economies. If the ruling parties take a beating in the upcoming election, Japan could be pushed into further fiscal spending or tax cuts. Opposition parties have lobbied for a decrease in the sales tax to varying degrees, while the ruling Liberal Democratic Party has proposed cash handouts that take less of a toll on public finances. “These crazy moves probably can’t be helped until the election is over,” said Tsutomu Soma, a bond and currency trader at Monex Inc. who is a 40-year trading veteran. “I’ve never seen Japan’s bonds move like this before an election. Usually you just think about it after the election’s done.” --With assistance from Mia Glass, Alice French, Masahiro Hidaka, Issei Hazama, Yoshiaki Nohara and Toru Fujioka. (Updates with more quotes, economic context and implications for corporate debt market.) Most Read from Bloomberg Businessweek ‘Our Goal Is to Get Their Money’: Inside a Firm Charged With Scamming Writers for Millions Trump’s Cuts Are Making Federal Data Disappear Thailand’s Changing Cannabis Rules Leave Farmers in a Tough Spot Trade War? No Problem—If You Run a Trade School Will Trade War Make South India the Next Manufacturing Hub? ©2025 Bloomberg L.P.