Japanese bonds log biggest weekly foreign outflow in 6 months

Japanese bonds recorded their largest weekly ​foreign outflow in six ​months in the week ‌through September 26, ​as a global bond-market selloff and the Bank of Japan's (BOJ) rate hike—along with signals of ‌further tightening—weighed on investor sentiment. Foreign investors withdrew 4.61 trillion yen ($29.16 billion) from Japanese bonds during the week, marking their largest weekly net sales since March ‌28, Ministry of Finance data showed.

Japanese long-term bonds recorded 1.34 trillion yen ‌in foreign outflows, the largest weekly amount since July 25, while net foreign withdrawals from short-term bills surged to a six-month high of 3.27 trillion yen. The BOJ raised ⁠its ​key policy rate ⁠to a 31-year high of 1.25% last month and signaled further rate hikes to ⁠counter persistent inflationary pressures driven by elevated crude oil prices.

The 10-year Japanese government bond ​yield climbed to 3.115% last week, its highest level since August 1996, ⁠amid inflation concerns and expectations of further monetary policy tightening. At the same time, Japanese ⁠stocks ​recorded a third consecutive week of foreign outflows, totaling 362 billion yen.

Elsewhere, Japanese investors sold 684.5 billion yen of foreign long-term bonds, ⁠marking a second straight week of net outflows. However, they bought 130.9 ⁠billion yen ⁠of foreign short-term bills. Japanese investors also purchased 225.8 billion yen of foreign stocks, remaining net buyers for a third ‌consecutive week.

($1 = ‌158.0800 yen)