Significant Japanese net selling of Australian government bonds in June: Japan–Australia portfolio investment flow series #6.

Research evidence excerpt

Global Markets Research

18 August 2026

FX Insights

Foreign Exchange - Global

Significant Japanese net selling of Australian

government bonds in June

Research Analysts

Japan–Australia portfolio investment flow series #6.

Andrew Ticehurst - NAL

• Japanese investors were unusually large sellers of Australian long-term government

bonds in June, and we think their activity remained weak in July.

Global FX Strategy

• While lifer interest could stay subdued, we note some interest in Semis. We identify

several factors that could prompt a return of broader interest from Japan, and note

that, in the interim, global interest in AUD bonds (ex-Japan) remains strong.

Australia/New Zealand Rates

Strategy

Tomoki Hideshima - NSC

• We take a quick look at other topical issues, including GPIF’s asset allocation, FX

intervention and hedge ratios; our colleagues believe the GPIF is unlikely to make

significant repatriations in the near term.

Large net selling of ACGBs in June

Japanese investors were substantial net sellers of Australian securities in June. Japanese

BOP data released last week highlight that this was heavily concentrated in large net

selling of sovereign bonds (ACGB’s). Australian net sovereign bond sales totalled

JPY572bn (AUD5.1bn) in the month, swamping modest net buying of Australian nonsovereign debt (AUD0.2bn) and purchases of AUD kangaroo bonds (AUD0.6bn; Figure 1).

Data details highlight that this was driven by a surge in selling, while buying held fairly

steady during the month (Figure 2). Over the past few years, June has been a month

featuring typically below-average selling, so the large-scale selling this month is unusual.

Fig. 1: Japanese activity in AUD bonds

Monthly (AUDbn)

Fig. 2: Japanese purchases and sales of long-term Australian

sovereign debt

Source: MOF

Monthly (JPYbn)

The natural question is what drove this unusually large selling of ACGB’s? We think a few

forces may have been at work:

• Long-end ACGBs did outperform in June; the 10yr yield fell by about 10bp,

outperforming UST’s, with that 10yr spread narrowing around 14bp to +26bp. This

occurred as oil prices fell (Brent to ~USD73 from ~USD92, following the signing of the

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