Japanese investors turned sellers of US sovereign debt to the tune of 618.7 billion yen ($ 5.6 billion) in February, with the global bond rout forcing them to cut losses.
Net sales, the first since August, also came in the sale of a record amount of Australian sovereign debt, according to Japan’s balance of payments figures released on Thursday.
“While US yields drove global yields higher in February, net sales far exceeded Japan’s investment position,” said Tsuyoshi Ueno, senior economist at the NLI Research Institute in Tokyo. “Investors seem to have cut their losses.”
As the Biden administration’s pandemic relief bill raised expectations for a stronger economic recovery in the United States and lowered bonds, Japanese investors reduced their exposure to interest rate risk. interest, said Kenta Inoue, senior market economist at Mitsubishi UFJ Morgan Stanley Securities Ltd. in Tokyo. He added that there may have been some profit taking as well.
Net sales of Australian sovereign bonds totaled 643 billion yen in February, with the biggest sales in numbers dating back to 2005.
Japanese funds had collected bonds Down Under and were likely scared as markets tested theThe central bank’s commitment to its monetary program, said Kazuhiko Sano, chief strategist at Tokai Tokyo Securities Co. in Tokyo.
Australia’s 10-year government bond yields topped 1.9% at the end of February, while those in the United States peaked at around 1.6% that month.
Separate preliminary monthly figures from the finance ministry showed life insurers were net sellers of foreign bonds for a ninth month in March.
Below is a table showing the net purchases / sales of foreign sovereign bonds in billions of yen, based on data from the Japanese Ministry of Finance.
Note: Sovereign bonds in Japanese data refer to securities issued by governments, government agencies and local authorities, and
those with an initial maturity of more than one year.