Foreign investors pulled money out of Japanese bonds last week, breaking their three-week-long buying streak amid expectations of rising yields following the Bank of Japan’s end to its negative rate policy.

They offloaded a net 3.89 trillion yen ($25.69 billion) worth of long-term Japanese bonds on a net basis last week, their largest weekly net selling since mid-January 2023, data from the Ministry of Finance showed.

Japanese short-term debt instruments, however, attracted a net 494.5 billion yen of foreign inflows during the week after registering 1.16 trillion yen of net selling the week before.

The BOJ ended its negative rate policy last week but the 10-year JGB yield still shed about 4.3 basis points during the week, thanks to the central bank’s purchases in the bond markets.

The central bank, however, said that it would eventually scale back its government bond purchases.

Amid market speculations that the BOJ might move faster with additional rate hikes, some analysts expect Japanese yields to rise from next week onwards as Japan begins a new fiscal year.

The domestic equities market, meanwhile, attracted foreign inflows worth about 39.78 billion yen last week, after a net 674.22 billion of outflows in the previous week, exchange data showed.

The Nikkei and the broader Topix index gained more than 5% and hit record highs of 41,087.75 and 2,820.45, respectively, last week.

Overseas investors purchased a net 96.08 billion yen of cash equities last week but sold 56.3 billion yen of derivative contracts.

Japanese investors, meanwhile, poured 762.3 billion yen into long-term foreign bonds last week after about 818.8 billion yen of net selling, a week ago. They, however, pulled 154.1 billion yen out of short-term debt instruments.

Domestic investors also secured about 81.9 billion yen of foreign equities in their first weekly net purchase since Feb. 23. ($1 = 151.4000 yen)

Reuters