Japanese Bond Selloff Hits Record as BOJ Tightening Bites

Foreign investors have been selling Japanese bonds in large quantities amid expectations of further monetary tightening by the Bank of Japan. In the week ended September 26, they sold a net ¥4.61 trillion worth of Japanese bonds, marking their largest weekly outflow since March 28. This is part of a global bond-market selloff driven by rising interest rates and inflation concerns.

The Bank of Japan raised its key policy rate to 1.25% last month, its highest level in 31 years, and signalled that further hikes may be needed. The benchmark 10-year Japanese government bond yield climbed to 3.115% last week, its highest level since August 1996.

Foreign investors also remained net sellers of Japanese equities for a third consecutive week, with outflows totalling ¥362 billion during the period.