Japan Flows: From fizzy to flat - TDS

Prashant Newnaha, Senior Asia-Pacific Rates Strategist at TDS, notes that Japan's net foreign bond buying for the new fiscal year kicked off with a bang and they found net buying of Europe continued, but this buying has slowed with buying of 'other' markets picking up.

Key Quotes

“Japanese interest in Canadian fixed income spiked in April and net buying of US sovereigns turned positive for the first time since Sep'17, as yields in both markets approached highs for the year. However the Japanese investor base resumed selling down its holdings of Australian sovereign bonds.”

“The MoF 'Investor' flow data for May was a disappointment following the strong April foreign bond print. Japanese investors sold ¥1120b of foreign bonds in May, with cumulative buying over April and May falling short of 2005-17 average net purchases over the same period.”

“The outlook for Lifer and Bank flows will be key to the overall trend for future foreign bond flows.”