Global Bond Investors' Biggest Fear on Japan Cash Is Slowly Coming True
- Japanese shift home from overseas assets seen continuing
- Last year saw record Japanese outflows from foreign bonds
Pedestrians walk past the Bank of Japan headquarters in Tokyo, Japan.
Photographer: Kiyoshi Ota/BloombergThis article is for subscribers only.
Now that traders have an idea who’s likely to take the Bank of Japan hot seat, the focus will sharpen on the biggest worry of global bond investors — a wave of Japanese cash flowing out of international markets toward rising yields at home.
Local bond yields climbed on Friday’s surprise that economist Kazuo Ueda looks set to become the next BOJ governor, sending Japan watchers scrambling to determine whether he is a hawk or a dove. But beyond the yield volatility that any policy decision may soon trigger, the steady selling of overseas bonds in favor of Japanese alternatives has already begun in earnest and looks unlikely to stop.