Japan Investors Shift Away from Germany

Japanese dumped German sovereign debt for a fifth straight month, poised for the biggest net annual sales on record, as they bought the higher-yielding notes of France, the U.S. and Australia.

Investors sold 1.05 trillion yen ($10.3 billion) of bunds in May, taking sales this year to 4.5 trillion yen, according to data from Japan’s finance ministry and central bank. They boosted holdings of French sovereign bonds by 1.86 trillion yen, a record in the data back to 2005, and added 731.6 billion yen of U.S. Treasuries and 129.2 billion of Australian securities.

Japanese have reduced their exposure to the debt issued by Germany this year, with 10-year yields there at a one-year low and the widest discount to similar-maturity U.S. Treasuries since 1999. Germany’s 1.25 percent benchmark yield is the lowest in the euro area and compares with 1.69 percent for France, 2.81 percent for Italy and 5.84 percent for Greece.


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