Foreign Bond Selloff Hits Four-Month High on Oil Rally

Foreign investors pulled out of Japanese bonds in large numbers last week, with foreign outflows hitting a four-month high. According to data from Japan's Ministry of Finance, net sales of long-term bonds and short-term bills by foreigners reached a combined ¥4.4 trillion ($25.6 billion), the largest weekly net sales since March 28.

The sell-off was driven by concerns that rising crude oil prices and a weaker yen could push the Bank of Japan to tighten policy at its October meeting. The price of Brent crude surged nearly 9.85% last week, while the yen fell to a roughly four-decade low against the US dollar.

Japanese investors, on the other hand, were net buyers of foreign stocks, purchasing ¥320.2 billion worth of shares in their largest weekly investment in three weeks. However, they sold a net ¥811.4 billion of foreign long-term bonds and ¥41.1 billion of short-term securities.