Core Viewpoint - Mizuho Financial Group is adopting a "very conservative" investment strategy by significantly reducing its bond holdings while awaiting clearer signals from the Bank of Japan regarding interest rate policies [1][2]. Group 1: Bond Holdings and Strategy - Mizuho has drastically cut its holdings of Japanese government bonds from 25.1 trillion yen (approximately 170 billion USD) three years ago to 8.3 trillion yen (about 57 billion USD) as of March this year [1]. - The bank's foreign bond holdings increased from 8.9 trillion yen to 11.8 trillion yen, but the value has decreased compared to last year due to recognized losses [1]. - Mizuho's average remaining maturity for Japanese government bonds is one year, while for foreign bonds it is two years, indicating a preference for shorter-term investments [6]. Group 2: Market Conditions and Reactions - The demand for Japanese government bonds has reached a 12-year low, with the bid-to-cover ratio for 20-year bonds dropping to 2.5 times, the lowest since 2012 [2]. - The yield on 20-year Japanese government bonds surged approximately 15 basis points, reaching the highest level since 2000, while the 30-year bond yield also hit a record high since its issuance in 1999 [4]. - The Bank of Japan is currently adjusting its quantitative tightening process, with mixed opinions among market participants regarding the pace of bond purchases [7]. Group 3: Future Plans and Market Outlook - Mizuho plans to sell at least 350 billion yen worth of "strategic" holdings over the next three years to strengthen relationships with corporate clients [6]. - The bank is unlikely to engage in investment banking transactions in the U.S. and has already established sufficient products through its acquisition of Greenhill & Co. [6]. - Concerns about fiscal risks and supply excess are leading some investors to avoid ultra-long-term bonds [7].
央行撤退,大行观望,日本国债无人接盘!