Japan Rates Watch: JSDA June: Foreign outflows not a game changer

Research evidence excerpt

Japan Rates Watch: JSDA June: Foreign outflows not a game changer

Accessible version

Japan Rates Watch

JSDA June: Foreign outflows not a game

changer

Select Subject

21 July 2026

Foreign selling, limited impact Rates Research

The JSDA OTC bond trading data showed that foreign investors turned net sellers of Japan

JGBs in June. Aggregate net investment across the super-long, long, and medium sectors

recorded net sales of ¥430bn, marking the first monthly net selling since July 2025. By

sector, the long-term segment saw net purchases of ¥370bn, while the super-long and

medium sectors recorded net sales of ¥110bn and ¥690bn, respectively. That said, this Tomonobu Yamashita Rates Strategist

did not come as a surprise, as the weekly International Transactions in Securities data BofAS Japan

had already indicated continued net disposals of long-term debt securities by non- +81tomonobu.yamashita@bofa.com3 6225 7950

residents since early June.

We do not believe that subdued demand from foreign investors will lead to a sustained

rise in long-end JGB yields. First, the weekly International Transactions in Securities data

for July 5-11 showed that non-resident investment in long-term debt securities returned

to net purchases. Second, investor sentiment toward yen duration has continued to

improve, according to our FX & Rates Sentiment Survey (see FX and Rates Sentiment

Survey: A hike too far 10 July 2026).

In addition, stronger demand from life insurers is likely to provide further support for the

long end. Life insurers shifted from net sales of ¥200bn in super-long JGBs in May to net

purchases of ¥630bn in June. While gross sales increased only modestly, gross purchases

rose sharply from ¥920bn in May to ¥1.8tn in June. It is still premature to conclude that