Via note from JP Morgan (via Bloomberg) on the impact of slumping global yields as support for JPY
The transmission goes like this:
- decline in yields
- slows Japanese purchases of overseas assets
- therefore slows the pace of unhedged portfolio outflows (out of yen)
- therefore "lowering what has been a long-standing hurdle for sustained yen appreciation”
As for the impact on the magnitude of yen flows:
- “A downshift from a roughly JPY20 trillion 12-month pace toward something in the region of JPY10 trillion, similar to the 2017-18 low, would not look out of place”
JPM also cite at the attractiveness of Japanese assets to major investors
- China-based investors net buyers of longer-dated Japanese debt for three consecutive months through August
- China the largest foreign buyer in recent months
