Japanese bank stocks slump as JGB yields hit multimonth lows

by user

Japanese bank stocks fell sharply Tuesday morning as the country’s government bond yields hit multimonth lows in the wake of Silicon Valley Bank’s collapse.

Shares of Mitsubishi UFJ Financial Group Inc.

were recently 7.5% lower and shares of Sumitomo Mitsui Financial Group Inc.

were down 8.0%.

Bank stocks had surged since late December when the Bank of Japan increased its cap on the 10-year Japanese government bond yield to 0.5% from 0.25%, which raised expectations for possible shifts from its ultralow interest rate policy.

Higher government bond yields mean banks can charge higher interest rates on commercial loans.

In the wake of the U.S. bank failure, however, prospects are dimming for the BOJ’s further policy shifts toward normalization.

The 20-year Japanese government bond yield was recently down 15 basis points at 0.960%, its lowest level since Oct. 7. The 5-year yield was down 7 basis points at 0.100%, its lowest level since Dec. 2.

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