Japan Sells Foreign Bonds Again

The Japanese MoF’s weekly international security flow data covering last week revealed that Japanese investors were net sellers of foreign bonds for the second consecutive week (and for the seventh time in eight weeks). Expect this trend to continue given BoJ monetary policy dynamics and subsequent moves in 10-Year JGB yields, alongside the still elevated FX-hedge costs that Japanese investors are currently burdened with and still steep domestic yield curve.

• Japanese investors were small net buyers of foreign equities for a third straight week.
• On the other side of the ledger, foreign investors were net sellers of both foreign bonds and equities last week, although the net amounts were relatively limited, and smaller than the net purchases witnessed in the respective categories in the week prior.

Source: MNI - Market News/Bloomberg/Japanese Ministry Of Finance