Japanese investors bought the most Treasuries in a year and the biggest amount of bunds since 2010, according to the Asian nation’s Ministry of Finance.
Net purchases of U.S. government debt totaled 1.26 trillion yen ($15.8 billion) in September, the largest figure since the same month last year, MOF data showed today. Japanese money managers acquired a net 881.5 billion yen of German sovereign debt, the highest since June 2010.
Demand for the world’s safest assets grew as the U.S. faces the so-called fiscal cliff of automatic tax increases and spending cuts, while the euro area’s prolonged debt crisis weighs on the region’s economy. Japan’s benchmark 10-year bond yielded 0.75 percent today, the lowest globally after Switzerland and Hong Kong.
“Money managers are struggling to find investment opportunities domestically and have to look abroad,” said Hideki Shibata, a senior strategist for rates and currencies at Tokai Tokyo Research Center Co. “They need to go to haven assets overseas because there still remain concerns about the global economy.”
Japan raised its stake in Treasuries by 6 percent this year through August to $1.12 trillion, according to Treasury Department data released Oct. 16. Chinese holdings of the debt rose 0.1 percent to $1.15 trillion.
The Federal Reserve announced a plan on Sept. 13 to buy $40 billion of mortgage debt every month in a third round of quantitative easing. The European Central Bank unveiled an unlimited bond-purchase program that month.
China sold a net 135.2 billion yen in Japanese short-term debt in September and offered a net 19.7 billion yen in the nation’s medium- and long-term securities, MOF data showed.