<div id="readability-page-1">TOKYO, Dec 17 : Sumitomo Mitsui Financial Group, Japan's second-largest banking group, will begin raising its allocation to long-duration Japanese government bonds if yields rise and settle higher, its CEO said. &#34;If the 10-year yield rises a bit further and becomes embedded around that level, we'd be at the stage of gradually building out the portfolio with longer durations,&#34; Toru Nakashima said in an interview with Reuters last week. &#34;But it may still take a little while.&#34; His comments indicated that Japanese government debt is becoming more attractive after offering negligible returns during Japan's decades of deflation and the seven years in which the 10-year rate was held near zero as part of the Bank of Japan's &#34;yield-curve control&#34; policy. The yield on benchmark 10-year Japanese government bonds reached an 18-year high of 1.97 per cent on December 8, fuelled by concerns about Prime Minister Sanae Takaichi's debt-funded stimulus package and bets that the BOJ will raise rates at its monetary policy meeting this week. Since then, the 10-year yield has hovered at just below a 2 per cent threshold. According to a Reuters poll, a majority of economists expect the BOJ to raise rates this week, with another increase on the cards by next September. &#34;In historical or global terms, the 2 per cent level is not all that high,&#34; Nakashima said. &#34;For the time being I don't think there's reason to be too concerned.&#34; But the Takaichi administration's perceived fiscal largesse - instituting a stimulus package that includes handouts and tax breaks funded by additional borrowing - has pushed borrowing costs up and the value of the yen down since October. &#34;If the government doesn't maintain fiscal discipline, there's a chance that all of a sudden that 2 per cent passes by 3 per cent and hits 4 per cent,&#34; Nakashima said. &#34;We have to be careful of that.&#34; Currently only a fraction of SMFG's banking unit's 10.6 trillion yen ($68.44 billion) in JGB holdings are made up of bonds with durations of 10 years and up. &#34;Our fundamental position at present is not to take risk on our bond portfolio and stick to extremely short durations,&#34; Nakashima said. ($1 = 154.8700 yen)</div>

SMFG

<p>SMFG to boost 10-year JGB holdings if yields rise and stabilise, CEO says</p>