Long-term interest rate rises to 2.95%, highest in 30 years; government bond auction to be a litmus test

Long-term interest rate temporarily hits 2.95%, highest in about 30 years The 10-year JGB yield rose to levels not seen since September 1996. With budget requests for fiscal 2027 expected to expand to a record 140 trillion yen, the September 1 government bond auction will be a litmus test of investor demand. The 2-year yield also marked its highest level in 31 years. 1234

G20 opens; Bessent signals expectations for BOJ rate hike The G20 finance ministers and central bank governors meeting opened in Asheville, U.S., with Finance Minister Satsuki Katayama and Bank of Japan Governor Kazuo Ueda in attendance. U.S. Treasury Secretary Bessent said "the Japanese government and the BOJ will take measures that lead to a stronger yen," expressing expectations for a BOJ rate hike and saying the yen's exchange rate is "fairly suppressed." The focus is whether the first Japan-U.S. finance ministers' talks since the coordinated intervention at the end of July will take place. 567

Mitsubishi UFJ and Sumitomo Mitsui to raise floating mortgage rates by 0.25% From September, they will raise the base rate to 3.375% per annum, with Mitsubishi UFJ marking its highest level since 2006 and Sumitomo Mitsui since 2001. The move follows the BOJ's hike in its policy rate to around 1.0% in June, and is the first in six months since March this year. 8

Nikkei average falls; semiconductor stocks sold as long-term yields rise On Monday the 31st, the Tokyo market saw selling lead as long-term interest rate rises weighed, with the Nikkei temporarily falling more than 700 points. It later trimmed losses on dip-buying, but semiconductor-related shares were weak amid expectations of a BOJ rate hike. 91011

Kioxia and SanDisk plan 5 trillion yen NAND investment The two companies plan to invest more than $31 billion (about 5 trillion yen) in total by 2032 in their Yokkaichi and Kitakami plants, conditional on government support. The plan responds to growing AI demand and aligns with the economic policies of the Takaichi administration. 12

Foreign hiring expands amid labor shortages, conflicting with Takaichi administration's stricter rules According to a Ministry of Health, Labour and Welfare survey, 68.2% of companies employ foreign workers to address labor shortages. With the unemployment rate at 2.4% in July, a one-year low, the reliance on foreign workers has been highlighted even as Prime Minister Takaichi pushes to tighten residency status requirements. 13