Japanese Investors Return to Foreign Bonds in October
Japanese investors became net buyers of foreign bonds in October for the first time since July, driven by falling US Treasury yields and AI stock volatility.
The Ministry of Finance of Japan reported that Japanese investors became net buyers of foreign bonds in October for the first time since July, purchasing a net 493.9 billion yen ($3.13 billion). This shift included 457.2 billion yen in long-term bonds and 36.7 billion yen in short-term bills. The return to foreign debt followed a decline in US Treasury yields from 25-year highs and a selloff in AI-linked technology stocks, which increased the demand for safe-haven assets.
Beyond bonds, investors recorded their largest monthly net investment in foreign stocks since March, totaling 1.46 trillion yen. However, the October rebound occurred against a broader trend of divestment. Japanese investors have sold a net 4.16 trillion yen of foreign debt holdings so far this year.
Data from the Bank of Japan indicates a strategic reallocation of capital during the first nine months of the year. Investors sold 6.06 trillion yen of US bonds while purchasing 719.49 billion yen of European bonds, with specific investments flowing into Italy, Spain, and Germany.
