JAPAN DATA: Local Investors Buy Offshore Bonds For 2nd Straight Week
Aggregate Japan weekly offshore investment flows were more muted in the week ending April 25, see the table below. Offshore investors continued to buy local stocks, marking the 4th straight week of inflows. We continue to see this segment reduce the net selling position built up since the start of the year. Cumulative outflows rest just under -¥1.8trln for 2025. We were at -¥5.6trln at the end of March. Offshore investors continued to add to local bond holdings, but only modestly. This marked the fourth straight week of inflows into this segment.
- In terms of Japan outbound flows, we did see local investors increase offshore bond purchases. We have still seen net outflows for offshore bond purchases for April though. Since the start of the year cumulative flows are close to flat.
- Local investors continued to buy offshore stocks, for the 6th straight week.
Table 1: Japan Weekly Offshore Investment Flows
| Billion Yen | Week ending April 25 | Prior Week |
| Foreign Buying Japan Stocks | 278.3 | 705.6 |
| Foreign Buying Japan Bonds | 60.0 | 998.1 |
| Japan Buying Foreign Bonds | 435.2 | 218.2 |
| Japan Buying Foreign Stocks | 133.8 | 610.4 |
Source: MNI - Market News/Bloomberg
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AUSSIE BONDS: ACGB May-34 Auction Results
The AOFM sells A$800mn of the 3.75% 21 May 2034 bond, issue #TB167:
- Average Yield (%): 4.3260 (prev. 4.1813)
- High Yield (%): 4.3275 (prev. 4.1825)
- Bid/Cover: 3.9125x (prev. 3.6057x)
- Amount Allotted at Highest Accepted Yield as Percentage of Amount Bid at that Yield (%): 34.4 (prev. 61.6)
- Bidders: 32 (prev. 35), 14 (prev. 12) successful, 6 (prev. 5) allocated in full
CNH: USD/CNH Near 7.2800 As Tariffs/Trade News Awaits
USD/CNH tracks near 7.2800 in early Wednesday dealings. Intra-session highs from Tuesday came in at 7.2840. CNH lost 0.21% for Tuesday's session. Spot USD/CNY finished up at 7.2702 Tuesday, while the CNY CFETS basket tracker edged a little higher to 99.05 (per BBG).
- Upside focus in USD/CNH is likely to rest on a move above 7.3000, which marked early March highs. Downside support may be at the 200-day EMA (near 7.2400), while the simple 200-day is further south, close to 7.2400.
- USD/CNH looks too elevated relative to lower US-CH government bond yield differentials, with generally softer US survey data/inflation concerns not painting a great picture for the US economic backdrop.
- Still, as we noted yesterday, as the CNH weakened despite a firmer Caixin PMI print, near term focus will rest on the tariff announcement later Wednesday in the US afternoon. 1 week implied vols have ticked up but from low levels, the 1 month remains fairly benign around the 4.47% level.
- There is also a report due on China compliance with Phase One trade deal that the US-China negotiated during Trump's first term as President (see this link)
- In the equity space, yesterday's onshore markets managed modest gains, while in Tuesday US trade the Golden Dragon index nudged up 0.50%.
- The local data calendar is empty today, with the Caixin services PMI and composite index out tomorrow.
AUSSIE BONDS: ACGB May-34 Supply Faces Lower Yield But Steeper Curve
Today, the Australian Office of Financial Management (AOFM) will sell A$800mn of the 3.75% 21 May 2034 bond, issue #TB167. The line was last sold on 25 September 2024 for A$700bn.
- Several factors could influence bidding at today’s auction.
- The current yield is 25bps lower than at the previous auction and 30-35bps below the November 2024 high. The previous auction occurred when yields were at their highest level since the November 2023 cycle peak.
- However, the 3/10 yield curve is at its steepest since January 2022.
- The line's inclusion in the XM basket is also expected to support demand along with the resumption of positive sentiment toward longer-dated global bonds.
- While there is an expectation for continued firm pricing at auctions, some factors could constrain the overall strength of bidding.
- Results are due at 0100 BST / 1100AEST.
