Purchases Of International Bonds Accelerate

Weekly international security flow data from the Japanese MoF has revealed the largest round of net weekly purchases of international bonds on the part of Japanese investors since the depths of the initial COVID outbreak, with net purchases nearing Y2.7tn last week. This comes after domestic investors sold long end JGBs in January.

• The flows are likely to be unhedged from an FX perspective, owing to still elevated hedging costs, which opens up the potential landing spots for the cash flows as core global bond yields pushed higher, generating interest from the Japanese investor base.
• Last week’s net purchases represented the third consecutive week of net purchases of international bonds on the part of Japanese investors.
• The remaining major metrics all saw limited net flows last week.

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