Westpac: Bonds Still Attractive For JPY Hedged Investors

Westpac note that "since the beginning of the year, as AUD/JPY continued to push higher, there has been a lot of market discussion around profit-taking from some currency unhedged investors, especially as we headed into Japan's March financial year end. There has been an associated concern that this sector, which was a very significant buyer of AU debt in 2020, may be looking elsewhere for opportunities. However, we do not think that the demand profile has shifted drastically and point to the relative value opportunities for FX-hedged investors. Historically, when there is significant volatility in global markets, Japanese investors have pared back their risk seeking, only moving to take advantage of opportunities when calmer conditions prevail. We suspect that will remain the case."