Foreign investors buy JGBs as inflation pressure easing

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Foreign investors buy JGBs as inflation pressure easing

In the last week, TOKYO Foreign investors bought the largest amount of Japanese government bonds in more than a year as upward pressure on global yields was lessened amid signs that U.S. inflation was moderate.

The bank of Japan will change its rates, as investors bet the Bank of Japan will change its rate policy after a record 6.4 trillion yen sell-off in September. Foreigners sold another 1.74 trillion yen of bonds in October.

The absence of the Bank of Japan's policy meeting in November is one reason that investors bought back JGBs to cover short positions, said Takafumi Yamawaki, head of Japan's rates research at J.P. Morgan Securities.

The BOJ is an outlier in a global wave of monetary policy tightening to combat soaring inflation. Under YCC, or yield curve control, the BOJ guides short-term interest rates at 0.1 per cent and the 10 year bond yield around zero.

The BOJ would have to tighten policy to send the 20 year JGB yield to a six-year high in October, as a result of upward pressure on global yields.

The pressure was easing after U.S. inflation cooled in October, supporting expectations that the Federal Reserve could slow its tightening pace.

The November policy meeting minutes of the U.S. Federal Reserve signalled a slower pace of future interest rate hikes.

The BOJ is scheduled to hold a two-day policy meeting on December 19 -- 20.