Key facts
- Japanese investors sold foreign bonds for a fifth straight week, the longest selling streak in four years.
- Total net disposals of foreign long-term bonds over five weeks reached about 3.43 trillion yen.
- Year-to-date net sales of foreign long-term bonds stand at 5.18 trillion yen, the largest for the period since 2022.
- Domestic Japanese banks have led this year's selling of foreign bonds.
- Life insurers plan to maintain or increase domestic bond purchases in the second half of the fiscal year.
Japanese investors have sold foreign bonds for five consecutive weeks, the longest selling streak in four years, as rising yields on Japanese government bonds encourage a shift in allocation strategies. Through October 17, investors sold a net 161.6 billion yen ($1.02 billion) of foreign long-term bonds and 156.9 billion yen of short-term bills. The pace of selling slowed as US Treasury yields eased from recent highs, influenced by stock market volatility related to AI concerns. The benchmark 10-year US yield retreated from a 24-1/2-year high, while the 10-year French government bond yield reached a 24-year high amid domestic protests. Year-to-date net sales of foreign long-term bonds by Japanese investors total 5.18 trillion yen, the largest for the period since 2022. Domestic Japanese banks have been the primary sellers, while life insurers plan to increase their domestic bond purchases. In contrast, foreign investors were net buyers of Japanese long-term bonds for a third week, purchasing 1.45 trillion yen, though they sold 2.24 trillion yen of short-term bills.