Japanese Long-term Bonds Net Sell of 1.25 Trillion Yen, Stocks Net Buy of 621.2 Billion Yen

Between August 9 and 15, foreign investors net sold 1.2499 trillion yen in Japanese long-term bonds while net buying 621.2 billion yen in Japanese stocks and investment fund shares. According to statistics released by the Japanese Ministry of Finance, during the same period, short-term bonds also saw a net sell of 1.2075 trillion yen. Foreign investors sold both long-term and short-term Japanese bonds, but showed a preference for buying stocks and investment fund shares. This trend is the opposite of the previous week, where from August 2 to 8, foreign investors net sold 368.6 billion yen in Japanese stocks and investment fund shares while net buying 558.9 billion yen in long-term bonds. The Ministry of Finance stated in a release on August 3 that the background for buying yen was a measure to respond to excessive fluctuations and disorderly movements. The Bank of Japan explained the rise in long-term interest rates as being due to changes in market structure and rising underlying inflation. The yield on Japan's 10-year government bonds moved around 2.895%, approaching the 3% mark for the first time in 30 years. The Nikkei average stock price closed down 3.2% at 65,326.42. The flow of foreign funds varies by asset, and the selling of long-term bonds is interpreted as reflecting the burden of bond prices in a rising interest rate environment. The Ministry of Finance statistics only show the direction of transactions, and the reasons why foreigners sold long-term bonds and bought stocks remain unclear.

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