How Japan's bond rout is turning the tide of global capital
Higher returns are drawing Japanese institutions back home as a J.P. Morgan survey found 82 pension funds plan to boost domestic bond holdings.
- On Tuesday, Japan's 10-year government bond yield hit 3% for the first time since 1996, marking a historic threshold that signals a major shift in global investment flows.
- For decades, Japanese investors chased higher yields abroad, but rising domestic returns now encourage them to pull capital home, reducing their traditional role as reliable foreign bond buyers.
- Official data shows Japanese investors sold a net 3 trillion yen in overseas debt through August 22, marking the largest year-to-date outflow since 2022.
- "The story is not large-scale repatriation, but Japan gradually ceasing to be the marginal buyer of foreign bonds," said Masahiko Loo, senior fixed income strategist at State Street Investment Management in Tokyo.
- Prime Minister Sanae Takaichi's push for big fiscal spending and Bank of Japan rate hikes expected later this month could drive yields higher, pressuring global markets dependent on cheap Japanese capital.
49 Articles
49 Articles
This Wednesday, September 2, the yield of the 10-year bond of the State of Japan (JGB) negotiates today around 3.02%, remaining at the historical level of 3% reached this week for the first time since September 1996. It is the end of the carry trade.
The Japan Times
How Japan’s bond rout is turning the tide of global capital
While there's no sign of Japan dumping its $2.4 trillion hoard in overseas debt yet, global fund managers and a growing body of data is showing a steadier drawdown is underway.
Global Market: Japan’s 3% bond yield barrier signals shift in global debt flows
Japan’s 10-year government bond yield crossing 3% is making domestic fixed-income assets increasingly attractive, raising concerns that Japanese institutional investors could reduce their overseas bond exposure.
Amid Japan's deteriorating fiscal situation and expectations of an interest rate hike this month, the yield on Japan's 10-year government bonds has risen day after day, surpassing 3% for the first time in 30 years. Following the surge in Japanese bond yields, government bond yields in Korea, the U.S., and Europe also reacted with simultaneous shock and rose sharply. The U.S. Treasury Secretary expressed concern over a further rise in U.S. Treasu…
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