Japan: Bond outflows reshape global yields - Commerzbank
Commerzbank's Volkmar Baur highlights Japanese investors' net selling of foreign bonds and its implications for global yields. Although Japanese investors have recently returned as buyers of French bonds, their selling of US bonds has provided some support to the euro against the dollar.
Volkmar Baur of Commerzbank explains the impact of Japanese investors selling foreign bonds on global yields. Despite recent returns as buyers of French bonds, Japanese investors have sold US bonds, contributing to the euro's strength against the dollar. Over the past year, Japanese investors have sold JPY 5tn more in foreign bonds than they have purchased.
This trend of net selling has only occurred three times in the past 20 years. The fact that Japanese investors are increasingly net sellers indirectly affects global bond markets. While they have been net sellers of long-term French bonds, they have recently resumed buying them. Japanese bond flows have provided some support to the euro relative to the US dollar, as they have primarily been selling US bonds.
Lower US bond yields and Japan's Household Spending data have supported the USD/JPY pair, while a strong US Dollar and geopolitical concerns could limit Gold's upside potential.
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