Analysis-Japan’s bond ’falling knife’ stalls repatriation rush

The repatriation of Japanese money overseas has started, but a larger scale is being delayed by uncertainty surrounding Japanese bond yields and how much further the central bank will raise interest rates. The Bank of Japan may have done enough to prevent another wave of speculative attacks on the currency, with a recent rate hike, inflation-fighting pledges, and potential rate checks in the foreign exchange market.

Major investors, however, are hesitant to invest heavily in domestic bonds while yields continue to rise and policymakers provide limited insight into how much further rates must increase. This caution is slowing down capital repatriation, leaving Japan's considerable overseas capital largely stagnant and preventing a substantial yen rally, which could have significant implications for global markets.