Due to the global bond market selling wave, the yen continues to depreciate, and the market betting that the Bank of Japan may adjust its monetary policy , foreign capital has fled the Japanese bond market, and the Japanese bonds sold in September set a record.
Preliminary data released by the Japanese Ministry of Finance showed that in September, overseas fund sold 6.39 trillion yen (about 43.9 billion US dollars) of Japanese bonds (mostly government bonds), setting a record high.
was affected by the sell-off, and Japan's 10-year Treasury bond yield soared rapidly, touching the upper limit of 0.25%. In order to defend the yield curve control (YCC) policy, the Bank of Japan announced several bond purchases in September and expanded its purchases. After the intervention of central bank , Japan's 10-year treasury bond yield is currently barely operating below 0.25%.
Regarding the reasons for the sell-off of Japanese bonds, Tsuyoshi Ueno, a senior analyst at NLI Research Institute, analyzed that part of it was dragged down by the wave of global bond market selling. In addition, the continued decline of the yen and the Bank of Japan's September monetary policy meeting sparked some suspicion from the outside world - The Bank of Japan may adjust its monetary policy due to the continued weakness of the yen and the pressure of upward domestic inflation.
JP Morgan said in a recent report that the Bank of Japan faces two "uncoordinated issues". One is to maintain its position as the world's second largest bond market, and the other is to avoid the rapid decline of the yen due to monetary policy. Therefore, the Bank of Japan may turn faster than market expectations. The bank believes that the turn will be in March next year, and the previous forecast is mid-next year. Steve Englander, an analyst at Standard Chartered Bank , also said last week that rising prices in Japan combined with pressure from the financial markets may force the Bank of Japan to make adjustments.
In September, as the Bank of Japan insisted on its loose monetary policy over , the short power of the yen strengthened, and the yen fell to a 24-year low against the US dollar, prompting the Japanese Ministry of Finance to interfere in the foreign exchange market. As of press time, the yen exchange rate against the US dollar is still falling.
Meanwhile, balance of payments data shows that Japanese funds returned to the sovereign bond market in August and became a net buyer of the US sovereign bond worth 565 billion yen, for the first time since October last year. In addition, in the past nine months, Japanese funds have had a net outflow of 15.7 trillion yen.
In this regard, Ueno said: After months of selling, Japanese investors are likely to be relieved by the arrival of a stable yield period.
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