Japan Investors Become Net Buyers Of Foreign Bonds In January

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Japan Investors Become Net Buyers Of Foreign Bonds In January

Japanese Investors Become Net Buyers Of Foreign Bonds In January

January was the first month since the last 5-months duration that investors from Japan became net buyers of foreign bonds. According to experts, a drop in the US bond yields has raised the hopes that other banks will also slow their rate hikes pace.

As per the data released by the Ministry of Finance, investors from Japan invested 1.56 trillion Yen in foreign bonds. This is equivalent to around $11.79 billion and has become one of the biggest investments since September last year.

If we look at the yield of 10-year US bodies, it was around 3.321%, which is the 4-month low. For the most part, the buying was concentrated during the first half of the month.

But once the expectations of rate hikes from the Fed fell down, the investors reverted towards selling in the later half of the month.

Around 1.1 billion yen were sold by the companies operating in the life insurance sector. Similarly, the shins bought bonds worth 550 million yen. And the trust banks reportedly invested 1.3 billion yen in foreign bonds.

Japanese Investors Were Net Buyers

Overall, the investors from Japan were net buyers of foreign bonds. In addition, this investment was made on an unhedged basis.

According to experts, the investors were drawn to foreign bonds as they were more attractive options when compared with Japanese bonds.

At the time of writing this, the yield of 10-year bonds from Japan was around 0.5%. And in December, BoJ extended the upper range of the policy rate to 0.25% from the earlier rate of 0.5%.

According to some analysts, the central bank is committed to raising the upper cap or abandoning the policy altogether. And the main reason behind this would be the inflation that is currently at 41 years high!

For now, it seems that the money is flowing out of Japan, which is not a good sign given the weak economic situation in the country.

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