Japan's Government Pension Investment Fund (GPIF), which manages approximately 318 trillion yen ($2.07 trillion), has not decided whether to change its asset allocation as expectations for a Bank of Japan rate hike in September strengthen. Health, Labor and Welfare Minister Kenichiro Ueno said GPIF judged in March that no adjustment was necessary but is still considering the matter, while its investment environment remains broadly consistent with portfolio assumptions. The fund's allocation was approximately 25% each to Japanese domestic bonds, foreign bonds, Japanese equities and foreign equities at the end of June, making even a 1-percentage-point shift potentially worth more than 3 trillion yen ($19.5 billion) in flows. Japanese government bond yields have risen, while a weak five-year bond auction underscored market sensitivity. Overnight index swaps are fully pricing a 25-basis-point Bank of Japan rate increase to 1.25% on September 18, with officials and market participants discussing the possibility of faster or larger increases. The yen gained 2.4% last week as investors unwound bearish positions, repatriated funds and reduced carry trades. The Bank of Japan's September 17–18 meeting will test expectations for rates, the yen, bond yields and GPIF's eventual allocation decision.