Japanese Offload Record Dutch Sovereign Debt, Sell Treasuries

Japanese investors sold a record amount of Dutch sovereign securities in February amid speculation debt prices will fall globally as the Federal Reserve continues to reduce purchases of U.S. securities.

Net sales of 226.3 billion yen ($2.2 billion) were the most for the Netherlands’ debt since comparative data became available in 2005 from Japan’s Ministry of Finance, which reported the February figures today. Japanese investors sold a net 395.1 billion yen of Treasuries that month after offloading 670.1 billion yen in January. That was the first back-to-back reduction in their holdings since June.

Bond yields in developed economies will rise this year, with 10-year Treasury yields projected to climb to 3.38 percent by the year-end from 2.7 percent, according to Bloomberg News surveys of analysts. Fed Chair Janet Yellen has said the benchmark rate could start to increase six months after the central bank ends its bond purchases. The Fed has cut its monthly bond buying by $30 billion this year.

“The prospects for higher yields in the U.S. are influencing the European debt markets as the Fed proceeds with tapering,” said Kazuhiko Ogata, the chief Japan economist at the securities unit of Credit Agricole SA. “Investors probably took profit.”

The Finance Ministry data also showed Japanese money managers bought bonds and notes denominated in Australia’s dollar for a fifth month in February, matching the longest streak of net purchases since January 2012. The amount totaled 672.7 billion yen during the five-month period.

To contact the reporter on this story: Masaki Kondo in Singapore at mkondo3@bloomberg.net

To contact the editors responsible for this story: Garfield Reynolds at greynolds1@bloomberg.net Jonathan Annells

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