With the market having largely priced in expectations that the Bank of Japan’s policy rate will be around 1.25%, the rise in bank stocks and concerns over a yen carry-trade unwind are being highlighted at the same time.
Expectations are spreading in the market that the Bank of Japan’s policy rate will settle at around 1.25%. Reports indicate that the view that the policy rate will remain at this level is affecting fund flows and security selection.
Reports also indicate that buying of bank stocks is increasingly helping support the broader market rally, drawing attention to developments in the financial sector.
At the same time, concerns have been raised that the unwinding of yen carry trades could accelerate, with currency movements and funding costs identified as key areas of market focus.