Core Viewpoint - Bank of Yokohama is preparing to re-enter the domestic bond market as the Bank of Japan approaches its peak interest rate, with expectations of rate hikes in the near future [1][5]. Group 1: Interest Rate Expectations - The Bank of Yokohama anticipates that the Bank of Japan will likely maintain interest rates this month but may raise them to 0.75% in December or January [1]. - The bank's market head, Hitoshi Inoue, predicts that the Bank of Japan will initiate further rate hikes in the fiscal year starting April 2026, potentially reaching a peak of 1.25% [1]. - Inoue expects that these actions could drive the 10-year Japanese government bond yield to around 2%, with the current yield at 1.65% [1]. Group 2: Investment Strategy - The Bank of Yokohama has begun to make "small" purchases of Japanese government bonds, focusing on two-year and five-year maturities due to their attractive yields [4]. - The bank's investment portfolio will primarily consist of sovereign bonds and equity investments in Japan and the U.S. as it adapts to a rising interest rate environment [1]. - The bank plans to maintain its current investment stance through the second half of the fiscal year ending March 2026 [4]. Group 3: Asset Composition - As of June 30, the Yokohama Financial Group's securities investment portfolio was approximately 2.1 trillion yen (about 140 billion USD), with about half allocated to Japanese government bonds and other yen-denominated securities [2]. - Inoue indicated that even with increased holdings in Japanese government bonds, the bank would retain some U.S. Treasury bonds as safe assets [6]. - The bank aims to keep its collateralized loan obligation (CLO) holdings stable, viewing CLOs as "high-quality assets with steady returns" [6].

Core Viewpoint - Jamie Dimon, CEO of JPMorgan Chase, warns that the market is complacent regarding President Trump's tariff plans, emphasizing the need for a tariff framework and a trade agreement between the EU and the US [1][2] Group 1: Tariff and Trade Agreement - Dimon highlights the importance of reaching a preliminary trade agreement between the EU and the US, which may allow the EU to lock in a 10% tariff rate after the August 1 deadline for negotiations on a permanent agreement [1] - He notes that the EU is facing significant competitiveness issues, which are linked to sluggish economic growth in the region, as outlined in a report by former Italian Prime Minister Mario Draghi [1] Group 2: Interest Rate Outlook - Dimon believes that the likelihood of interest rate hikes is higher than market expectations, suggesting a probability of 40% to 50% for an increase, compared to the market's 20% [2] - He indicates that the Federal Reserve is currently in a wait-and-see mode due to expectations of rising inflation, which has prevented any rate cuts this year [1][2]