Japanese investors dump foreign bonds for second consecutive week

Japanese investors sold a net 824 billion yen (US$5.20 billion) in foreign long-term bonds during the week, marking the second consecutive period of net outflows from international fixed-income markets. The move reflects growing unease among Japanese portfolio managers over inflation pressures building across global economies.

The pullback extended to shorter-duration assets as well, though at a more measured pace. Net sales of short-term foreign bills declined to 9.7 billion yen, the lowest level in seven weeks, suggesting some stabilisation in demand for overseas money-market instruments even as longer-dated bonds face sustained selling pressure.

The pattern underscores a broader shift in Japanese investor sentiment, as yields on overseas bonds remain volatile amid expectations of sustained inflationary conditions. With the Bank of Japan maintaining accommodative monetary policy while global central banks tighten, Japanese institutional investors appear increasingly cautious about committing fresh capital to foreign debt markets.

The retrenchment from overseas assets could have implications for regional emerging markets that rely on Japanese capital flows, particularly as fund managers reassess their risk exposure across international portfolios.