RBC On Japanese Investor Bond Flows In January

RBC note that "Japan bought a record amount of gilts in January and a decent amount of U.S. Tsys, turned net sellers of bunds and were more modest buyers of OATs and BTPs after a couple of stellar months. Despite the appetite for foreign bonds in January, Japan were net sellers of AU bonds in the month for the first time since Mar '20 and in reasonable size at A$3.1bn, the largest monthly amount of selling since Nov '18. Selling was concentrated in non-gov't product (credit/SSAs) at A$3.3bn, the most since June '13, with only a tiny purchase of ACGBs/semis. This is despite a relatively stable AUD/JPY and range bound 10-Year AU/U.S. spread, although the psychological Y80 level in AUD/JPY is likely to have triggered some selling. With AUD/JPY strengthening considerably in February and testing Y85, further selling is likely to have emerged."