Global Market: Japanese investors extend foreign bond selling streak to five weeks

Japanese investors sold foreign bonds for a fifth consecutive week through October 17, marking their longest selling streak since November 2022.

However, the pace of disposals slowed as US Treasury yields retreated from 24-1/2-year highs, Reuters reported, citing data from Japan’s Ministry of Finance.

Japanese investors sold a net 161.6 billion yen ($1.02 billion) of foreign long-term bonds during the week, the smallest amount in the five-week streak. They also sold 156.9 billion yen of short-term bills, the ministry’s data showed.


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The latest transactions brought net sales of foreign long-term bonds over the five weeks to about 3.43 trillion yen. Year-to-date net disposals reached 5.18 trillion yen, the highest level for the comparable period since 2022, according to Reuters.

The selling comes as global bond markets navigate shifting interest rate expectations and concerns over inflation and fiscal stability. The benchmark 10-year US Treasury yield, which reached 5.3645% earlier this month—its highest level in 24-1/2 years—has since declined by around 27 basis points.

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Meanwhile, the 10-year French government bond yield climbed to a 24-year high of 5.022% on Wednesday amid concerns over widespread protests in France.

Domestic banks have led Japanese investors’ foreign bond selling this year, while life insurers have said they plan to maintain or increase domestic bond purchases in the second half of the fiscal year, Reuters reported.

In overseas equity markets, Japanese investors purchased a net 128.3 billion yen of foreign stocks during the week, marking their fifth week of net buying in the past six weeks.

Foreigninvestors, meanwhile, purchased a net 1.45 trillion yen of Japanese long-term bonds, extending their buying streak to three consecutive weeks.

However, overseas investors sold 2.24 trillion yen of Japanese short-term bills, marking their largest weekly disposal in three weeks, the Ministry of Finance data showed.

In Japanese equity markets, foreigninvestors were modest net sellers, offloading 66.5 billion yen of shares after making net purchases of 3.55 trillion yen in the previous week, according to the data cited by Reuters.

The latest flows highlight diverging investment trends: Japanese investors continue to reduce their exposure to foreign long-term debt while remaining net buyers of overseas equities, and foreigninvestors are extending their purchases of Japanese long-term bonds.

(Disclaimer: This article is based on inputs from agencies. These do not represent the views of The Economic Times)