Japan's GPIF May Sell $62 Billion in US Treasuries

The Government Pension Investment Fund (GPIF) may sell up to $62 billion in US Treasuries without needing a formal change to its asset-allocation policy. Analysts at Banco Santander SA report that the fund's current guidelines allow for a 5% deviation from its 25% foreign bond target, which would permit a reduction of the portfolio to 20%.

This potential divestment follows a management meeting last month and a surge in Japanese 10-year yields, which hit 3% last week for the first time since 1996. Analysts suggest the GPIF might reduce foreign holdings if the Bank of Japan implements rate hikes to strengthen the yen.

Health Minister Kenichiro Ueno stated that officials are still considering whether a formal asset allocation review is necessary. Japan currently maintains a $1.1 trillion stockpile, making it the largest foreign holder of US Treasuries.