Market themes have narrowed to three points: rising long-term interest rates, the situation in the Middle East and AI development. Dollar-yen trading has been limited, with caution capping the upside.
Market themes have narrowed to three points: rising long-term interest rates, the situation in the Middle East and AI development. Attention is concentrated on these three areas, and dollar-yen trading has remained firm but unable to push higher.
The appeal of investing in long-term bonds is said to be that the principal is returned at maturity, while investors may incur unrealized losses along the way. Although such investments are considered relatively safe, some believe that mechanical recovery at maturity alone does not satisfy the requirements.
Funding is required to make a bond investment possible. That funding depends on short-term interest rates, and the difference between the interest on yen-denominated bonds purchased in the past and current short-term interest rates continues to be recorded as a daily loss.
Under these circumstances, some believe that simply holding bonds to maturity will not resolve the issue. With price movements limited, investment strategies may need to be reassessed.