Japanese investors dump overseas bonds

Japanese investors sold the most overseas debt in a month. This is on concerns over monetary tightening by the world’s major central banks. According to Japan’s Ministry of Finance data, domestic investors sold a net 3.2 trillion Japanese yen ($27.64 billion) in overseas bonds. Meanwhile, the data showed they bought foreign equities worth 322 billion yen.

BoFA said that the Bank accounts sold foreign bonds in February. This is likely reflecting positional unwinding in the first half of the month, as the global yields rose before falling due to the Ukraine shock. It is also true that Japanese bonds bear-steepened a lot in February. Naka Matsuzawa, chief Japan macro strategist at Nomura said that they reduced relative attractiveness of foreign bonds, because there are growing concern over policy change at the BoJ. The total sales of foreign bonds and equities in the first two months of this year stood at 2.46 billion yen.

Bank of Japan Governor Haruhiko Kuroda ruled out the chance of tightening monetary policy or withdrawing stimulus. This is despite rising expectations that consumer inflation will approach the central bank’s 2% target. Meanwhile, the data from Bank of Japan showed that Japanese investors purchased U.S. bonds worth 172 billion yen in January. But sold U.S. stocks worth 282 billion yen. In the European Union, they purchased 1.19 trillion-yen worth of bonds during the same time, and sold 199 billion yen in equities.