Worst Loss in Decades Has Japan Shunning U.S. Debt at Wrong Time
- For Japanese, hedging dollar holdings is cheapest in 2 years
- Yet Q4 losses, specter of Fed rate hikes spur hesitation
Japan Shunning U.S. Debt at Wrong Time
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The last time it was this cheap for Japanese investors to buy Treasuries and hedge away currency risk was two years ago, when they were piling in and pushing holdings to a record high.
How times have changed. These days, America’s biggest foreign creditor is unloading U.S. debt. And in a warning sign for the $13.9 trillion Treasuries market, Japan’s famously risk-averse money managers are giving little sense that an about-face is imminent, even as their new fiscal year is poised to bring a clean slate after a punishing stretch of losses.