Japan's largest banks and insurance companies have been buying domestic government bonds and selling foreign debt in recent months, in moves that investors say could be early signs of a wider repatriation of capital by the country's institutions.
According to FT calculations based on data from the Japan Securities Dealers Association, large banks and insurers have together bought a net ¥5.4tn ($34bn) of Japanese government bonds with a maturity of two years or more in the five months to August. The moves represent the largest value of JGBs bought over a five-month period since the start of 2023, as yields have surged to multi-decade highs and the central bank's policy rate is at its highest in 31 years.
Sharp volatility in bond markets such as the US and France also appears to have prompted Japanese banks to sell foreign debt, with sales rising to ¥2.5tn in September, according to Ministry of Finance data. In the first nine months of 2026, banks' net sales of foreign debt were higher than in any other year since 2005. "JGB yields are now back up to levels that allow domestic investors to park their money at home rather than chase returns abroad," said Chris Scicluna, head of research at Daiwa Capital Markets Europe.
Speculation has grown about Japan's institutions, including the $2tn Government Pension Investment Fund, repatriating capital invested abroad over recent decades. Many investors fear such a shift could hit foreign stock and bond markets hard and lead to a sharp rise in the yen. A major factor has been the expectation that Japanese interest rates will remain positive for the long term. "The BoJ's more credible normalisation is helping anchor expectations that JGB yields will settle at higher levels," said Masahiko Loo, senior fixed-income strategist at State Street Investment Management.
Yields on Japanese 30-year bonds have surged from less than 2.3 per cent at the start of last year to a record high of 4.27 per cent earlier this month. Japan's net portfolio investments into US long-term government bonds have turned negative this year, with net sales at their highest since 2022. "JGBs are becoming a credible contender in the competition for global capital," said Loo.
Source: Financial Times Markets · Summarized by HeadlinesBriefing