Japanese investors continue selling foreign bonds

Japanese investors engaged in the sale of foreign bonds for the fifth consecutive week ending October 17, marking the longest selling streak since November 2022. Despite the continued trend, the pace of liquidation slowed as yields on U.S. Treasury securities retreated from their highest levels in 24.5 years.

According to data from Japan's Ministry of Finance, investors sold 161.6 billion yen ($1.02 billion) in long-term foreign bonds and 156.9 billion yen in short-term securities. This latest weekly figure represents the lowest amount sold during the current five-week cycle, which has seen cumulative net sales of long-term foreign bonds reach approximately 3.43 trillion yen. For the year-to-date, net sales of long-term bonds have totaled 5.18 trillion yen, the highest level for this period since 2022.

The selling pressure follows a period where the benchmark 10-year U.S. Treasury yield climbed to 5.3645% earlier in October. Since that peak, the yield has pulled back by approximately 27 basis points, contributing to the observed deceleration in Japanese divestment activity.