Chatter around the desks that Japanese buying of foreign bonds may begin again soon. Saying:

  • Some of the recent foreign bond sales by Japanese are related to UST redemptions & coupon payments (due today)
  • Given recent EM ructions and the general risk-off sentiment, plus the UST price gains,many medium to longer-term Japanese investors had incentives to lock in gains on older positions
  • Investors sold a net Y617.2 bn of foreign bonds, down from Y1.82 tn the previous week, and the overall volume traded was off considerably, suggesting potential flow shifts ahead