Foreigners weekly net buyers in long-term Japanese bonds ahead of election

Foreign investors cautiously bought long-term Japanese bonds in the week ended July 12 as yields rose ahead of the upper house election, which opinion polls suggest could see the ruling coalition lose majority, raising concerns about a fiscal strain.

Foreigners bought Japan's long-term bonds worth a net 170.4 billion yen ($1.15 billion) during the week, reversing a net sale of 167.8 billion yen the previous week, data from the Ministry of Finance showed on Thursday.

They offloaded short-term bills worth a net 710.2 billion yen.

The benchmark 10-year yield (JP10YTN=JBTC) scaled 1.595% on Wednesday, the highest since October 2008 after opinion polls showed that Prime Minister Shigeru Ishiba's coalition of LDP and junior partner Komeito may lose its upper house majority too in Sunday's election. They had lost their lower house majority last October.

Foreigners, meanwhile, bought Japanese stocks worth a net 446 billion yen during the week, logging their 14th weekly net purchase.

At the same time, Japanese investors sold 767.9 billion yen worth of foreign stocks, the most for a week since June 7, as they locked in profits at record high market levels on caution over U.S. President Donald Trump’s tariff threats.

They, however, invested a net of $759.3 billion into long-term foreign bonds, extending weekly net purchases into a fifth consecutive week.

($1 = 148.6100 yen)