Mitsuo Masuda, general manager of investment planning, said at an investment briefing session on the 24th that until last year, the basic approach was to buy at a level level to reduce risk, but the gap between the duration (remaining period) of liabilities and assets is almost on the verge of narrowing. This fiscal year, we will invest flexibly so that we can invest at the highest yield possible.”
The 30-year bond was trading at 1.955% on the 24th, above the company’s cost of debt (slightly below 1.8%). Mr. Masuda says, “Although it is quite attractive compared to the cost of debt, we believe there is still room for interest rates to rise, so we have not decided to make concentrated investments at this level.”
Sumitomo expects the Bank of Japan to raise interest rates to 0.25% in October. “There is a fair chance that the timing will be brought forward in consideration of the impact of the weaker yen on prices,” Masuda points out. Although he believes that further interest rate hikes are possible after that, he said, “I think we need to monitor wage and price trends for six months to a year.”
Regarding trends in U.S. monetary policy, he predicted that interest rates would be cut once in July-September and once in October-December.
[Sumitomo Life’s FY2024 Operation Plan]
| domestic bonds | decrease | Consider flexibly investing in ultra-long-term bonds when interest rates rise.There are many redemptions, and the balance is decreasing. |
| Hedged foreign bonds | flat | Balance reduction has progressed to a certain extent, so the status quo will be maintained. |
| open foreign bonds | Depends on market price | Consider additional investment depending on interest rates and exchange rates |
| domestic stocks | Depends on market price | Consider additional investment depending on stock price |
| foreign stocks | Depends on market price | Consider additional investment depending on stock price |
| alternative | increase | Considering infrastructure equity and PE fund investment |
[Financial environment outlook: outlook and range as of the end of March 2025]
| Domestic 10-year interest rate (%) | 0.8 (0.5-1.2) |
| Domestic 30-year interest rate (%) | 1.8 (1.4-2.2) |
| US 10-year interest rate (%) | 4.2 (3.5-5.0) |
| Nikkei average (yen) | 41000 (33000-45000) |
| NY Dow (dollar) | 41000 (32000-45000) |
| dollar yen (yen) | 145 (140-160) |
| euro yen (yen) | 160 (145-170) |
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