KUALA LUMPUR, Jan 7 (Bernama) -- Bursa Malaysia’s benchmark index rebounded from earlier losses to close at its intraday high on Wednesday, gaining 0.27 per cent in late trading as buying interest returned to selected heavyweights. At 5 pm, the FTSE Bursa Malaysia KLCI (FBM KLCI) advanced 4.48 points to 1,676.83 from Tuesday’s close of 1,672.35. The benchmark index opened 0.88 of-a-point lower at 1,671.47 and subsequently hit a low of 1,665.94 during the mid-morning session before gaining momentum toward closing. On the broader market, losers led gainers by 565 to 512, while some 526 counters were unchanged, 1,046 untraded, and 10 suspended. Turnover improved to 2.73 billion units worth RM2.76 billion versus Tuesday’s 2.66 billion units worth RM2.76 billion. Dealers said that investors were cautious following geopolitical developments in Asia.
Japanese Finance Minister Satsuki Katayama said the government is closely monitoring financial markets as the yield on 10-year Japanese government bonds (JGBs) hovers near 2%, a level last seen almost two decades ago.
“We are monitoring market trends very closely,” Katayama told reporters on Tuesday, adding that the government would manage JGB issuance “appropriately through close communication with the market.” She declined to comment on whether yields at 2% were a concern.
Japan’s benchmark yield reached its highest level since 2007 on Monday amid growing worries about the country’s fiscal trajectory and expectations that the Bank of Japan (BOJ) will continue raising interest rates.
Fiscal Concerns Intensify
Investor unease has been heightened by the government’s decision to pull back from its long-standing goal of balancing the budget after debt servicing. Prime Minister Sanae Takaichi’s latest economic package — the largest since pandemic-era stimulus — includes ¥11.7 trillion (US$75 billion) in new bond issuance.
Despite the fresh spending, Takaichi kept total bond issuance for the fiscal year below last year’s level by shifting more issuance toward shorter maturities.
Katayama sought to temper concerns, noting that IMF Managing Director Kristalina Georgieva recently affirmed the sustainability of Japan’s public finances after reviewing the new stimulus package.
BOJ Rate-Hike Expectations
Expectations that the BOJ will raise interest rates are contributing to the upward pressure on yields. Governor Kazuo Ueda has signalled the bank will consider a hike at its Dec 19 meeting — language similar to what he used ahead of January’s rate increase.
Traders now assign over an 80% probability to a December rate hike, based on overnight index swaps.
Business leaders are also sounding alarms. Keidanren chair Yoshinobu Tsutsui called the 2% yield level a “key milestone” and urged the government to safeguard market confidence. Japan’s 10-year yield has not consistently traded above 2% since 1997.
Key Takeaways
Japan’s 10-year JGB yield is nearing 2%, the highest since 2006–2007, prompting government attention.
Rising yields reflect concerns about fiscal sustainability and expectations of further BOJ rate hikes.
Takaichi’s extra budget includes ¥11.7 trillion in new bond issuance, though total issuance remains below last year’s level.
The IMF says Japan’s public finances remain sustainable, helping to reassure markets.
Markets assign an 80%+ chance of a BOJ hike on Dec 19.
Keidanren warns that sustained yields above 2% would be a significant shift not seen since 1997.
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