Tokyo, Feb 8, 2026, 07:01 JST — The market has closed.
- MUFG shares wrapped up Friday in Tokyo 2.5% higher at 2,951.5 yen.
- The lender has hinted at a possible move to increase its Japanese government bond holdings, now that yields appear to be stabilizing.
- Monday opens with investors eyeing Japan’s election outcome, shifts in bond yields, and the yen.
Mitsubishi UFJ Financial Group closed out Friday in Tokyo up 2.5% at 2,951.5 yen, the session’s high after dipping to 2,803 yen earlier in the day. 1
This is notable: MUFG is once again deep in the government bond market, the arena where Japanese banks handle their riskiest bets. Rising rates might boost lending margins, but they also squeeze bond holdings. Those so-called “unrealised losses” refer to paper hits on bonds the bank hasn’t sold—numbers that can flip fast if yields shift.
This isn’t just theoretical as the new week kicks off. Japan heads to the polls Sunday; the bond market hasn’t waited, responding to political pledges and fresh spending chatter. And traders got another nudge from the Bank of Japan, which hasn’t ruled out more rate hikes.
MUFG and Sumitomo Mitsui Financial Group are both looking to ramp up their Japanese government bond holdings, betting that higher yields will deliver stronger returns. “With long-term interest rates showing signs of peaking, I think we’ll cautiously rebuild our JGB position,” said Takayuki Hara, managing director and head of MUFG’s CFO office, during a briefing. Even so, MUFG ended 2025 sitting on 200 billion yen in unrealised bond losses after yields surged. For Toshinobu Chiba, a fund manager at Simplex Asset Management, a 10-year yield near 2.5% could tempt banks back in. 2
BOJ board member Kazuyuki Masu signaled that the central bank still aims to raise rates soon enough to prevent inflation from running above its 2% goal, keeping talk of another hike on the table. “Masu’s comments weren’t overwhelmingly hawkish,” said Rinto Maruyama, FX and rates strategist at SMBC Nikko Securities, but they “underscore the BOJ’s resolve” to keep moving on rate hikes. 3
Politics is also shaping the outlook in the short run. Prime Minister Sanae Takaichi’s coalition appears poised for about 300 seats out of 465 in the lower house, if the opinion polls are any guide. Her promise to halt the 8% sales tax on food has shaken investors, who are eyeing the potential 5 trillion yen annual revenue gap. Takaichi has made it clear: she’ll step down if she fails to keep her lower-house majority. 4
MUFG’s ADR in the U.S. ended at $19.14, gaining 89 cents on the previous close. That gives offshore investors a solid marker as Tokyo prepares to open.
The risk is clear enough: should the election result trigger looser fiscal policy and send yields spiking, banks’ bond portfolios get hit again and volatility snaps back. There’s also the chance that quicker BOJ tightening bumps up funding costs—a tough combination, since higher rates aren’t always a win in practice.
Trading in Tokyo picks back up Monday, with investors eyeing the yen and bond yields as they digest the election results. This week brings a busy supply slate: a 6-month Treasury bill auction is set for Feb. 9, followed by a 10-year inflation-linked bond sale the next day. The BOJ, for its part, won’t meet again until March 18-19. 5
