How big a threat are rising hedging costs for banks?

An increase in hedging costs has undermined the appeal of investing in US$ bonds for Japanese investors. This won’t affect the profitability of banks much as their holdings of foreign bonds are small. It presents a bigger headache for insurance firms, which are rather heavily invested in foreign debt securities. But the silver lining is that the increase in US Treasury yields has made them more attractive to those willing to tolerate exchange rate swings.