Japan Buys Foreign Bonds & Equities, Although Overall Net Flows Muted

Data from Japan’s MoF covering the week through 6 January revealed that Japanese investors were net buyers of international bonds, breaking a streak of 4 consecutive weeks of net sales, although net flows weren’t standout in size terms (Y566.8bn). This came as core global FI markets firmed during the early rounds of ’23 dealing and may very well have been unhedged on an FX basis.

• Elsewhere, international selling of Japanese bonds continued to moderate from the record levels seen in the week of the final BoJ decision of last year (which provided the surprise YCC tweak from the Bank), falling to a more paltry Y271.2bn, representing the 4^th straight week of net sales in that metric.
• On the equity side, Japanese investors were net buyers of international equities for a 6^th straight week, with net purchases hitting the highest weekly level observed since early October.
• Meanwhile international investors were small net sellers of Japanese equities, negating the net purchases seen in the prior week.