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18 Apr 2013
Forex Flash: Tide of Japanese outflows abroad till to be seen - UBS
FXstreet.com (Barcelona) - As UBS strategist Gareth Berry reminds us after last Asian data, Japanese investors were net sellers of foreign bonds again last week, according to official 'hard data' released.
"The conclusion is inescapable - the BoJ's bold easing initiative announced on April 4th has not yet triggered a tide of Japanese outflows abroad" he explains.
Grteh adds: "These annual deliberations are lengthy even in normal times. Now though, investors have an additional complication to consider - how should a new era of policy accommodation be incorporated into investment planning, especially given ongoing turbulence in the JGB market? So expect some delays this year."
He also mentions that foreign holdings of Japanese bonds were only marginally trimmed by Y176bn last week, although highlights foreign holdings of Japanese government bonds and T-bills stand now at an astounding Y84 trn, so according to the strategist, "even a partial retreat from the JGB market by foreigners, were it to happen, could be severely detrimental to the yen..."
For now, "accelerated BoJ bond purchases offer a good reason for foreigners to stay put, but if this excessive JGB volatility continues, patience could run out at some point" Gareth adds.
"The conclusion is inescapable - the BoJ's bold easing initiative announced on April 4th has not yet triggered a tide of Japanese outflows abroad" he explains.
Grteh adds: "These annual deliberations are lengthy even in normal times. Now though, investors have an additional complication to consider - how should a new era of policy accommodation be incorporated into investment planning, especially given ongoing turbulence in the JGB market? So expect some delays this year."
He also mentions that foreign holdings of Japanese bonds were only marginally trimmed by Y176bn last week, although highlights foreign holdings of Japanese government bonds and T-bills stand now at an astounding Y84 trn, so according to the strategist, "even a partial retreat from the JGB market by foreigners, were it to happen, could be severely detrimental to the yen..."
For now, "accelerated BoJ bond purchases offer a good reason for foreigners to stay put, but if this excessive JGB volatility continues, patience could run out at some point" Gareth adds.