JAPAN DATA: Local Investors Dump Offshore Equities
The most notable feature of last week's investment flows was strong selling by local Japan investors of offshore equities. At nearly -¥1.5trln in net selling, it was the largest outflow from this segment since early Nov 2022. It also marked the fourth straight week of selling for offshore equities. Still, including this period, since the start of 2025, cumulative inflows rest near +¥5trln YTD. Recent selling goes against the generally positive global equity trends since in recent weeks.
- Local investors also sold offshore bonds for a second straight week, however, this only partially offsets the strong net buying seen since early May.
- In terms of inbound flows to Japan, we had net buying of local stocks from offshore investors for the 10th straight week, albeit in reduced size compared to May weekly averages.
- We also saw further inflows into local bonds, but again this was at a reduced pace compared to end May.
Table 1: Japan Offshore Weekly Investment Flows
| Billion Yen | Week ending June 6 | Prior Week |
| Foreign Buying Japan Stocks | 180.2 | 336.1 |
| Foreign Buying Japan Bonds | 219.8 | 1165.4 |
| Japan Buying Foreign Bonds | -458.6 | -118.0 |
| Japan Buying Foreign Stocks | -1489.0 | -1144.1 |
Source: MNI - Market News/Bloomberg Finance L.P
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JGBS: Futures Sharply Weaker Overnight On US-CH Tariff Pause
In post-Tokyo trade, JGB futures closed sharply weaker, -75 compared to settlement levels, after a heavy session for US tsys.
- US tsys gapped lower in early London trade and stocks surged to the pre-Liberation Day levels (April 2) after the US and China agreed to pause their retaliatory reciprocal tariffs for 90 days.
- After a collective sigh of relief, US tsys traded sideways, near session lows for much of the session. Today’s focus is on April US CPI figures at 0830ET.
- According to MNI technicals team, JGB 10-year futures are holding the bulk of the recent strong bullish reversal from early April, rejecting any test of fresh cycle lows for the M5 contract. This defies the bearish momentum studies drawn on the longer-term chart, clearing moving-average resistance to print 142.40 at the new upper level. To the downside, sights are on 136.57, a Fibonacci projection. 144.48 is the medium-term target on any recovery.
- “Japan life insurers could temporarily slow net selling of foreign assets following the US-China 90-day tariff truce, as it could provide greater visibility on their expectations for Japan's long-term bond yields.” (per BBG)
- Today, the local calendar will see BoJ Summary of Opinions (April MPM) and Money Stock data alongside 30-year supply.
BONDS: NZGBS: Cheaper With US Tsys After 90d US-CH Tariff Pause
In local morning trade, NZGB yields are 7-8bps higher, after US tsys finished sharply cheaper. US tsys gapped lower in early London trade, and stocks surged to the pre-Liberation Day levels (April 2), after the US and China agreed to pause their retaliatory reciprocal tariffs for 90 days.
- After a collective sigh of relief, US tsys traded sideways, near session lows for much of the session.
- The increase in risk appetite and the less dovish Fed outlook saw the 2-year bond cheapen 12bps to 4.01%, with the 10-year yield rising 9bps to 4.48%.
- Projected US rate cut pricing retreated from prior levels (*) as follows: Jun'25 at -2.0bp (-2.8bp), Jul'25 at -10.8bp vs. (-13.1bp), Sep'25 -27.0bp (-29.3bp), Oct'25 -40.3bp (-42.6bp).
- Today’s focus is on April US CPI figures at 0830ET.
- Swap rates are 10-12bps higher, with the 2s10s curve unchanged.
- RBNZ dated OIS pricing is little changed across meetings. 25bps of easing is priced for May, with a cumulative 69bps by November 2025.
- Today, the local calendar will be empty ahead of Card Spending and Net Migration data tomorrow.
- On Thursday, the NZ Treasury plans to sell NZ$200mn of the 4.50% May-30 bond, NZ$200mn of the 4.25% May-36 bond and NZ$50mn of the 1.75% May-41 bond.
MNI: UK BRC APR BY VALUE SHOP SALES LFL +6.8% YY, TOTAL +7% YY
- MNI: UK BRC APR BY VALUE SHOP SALES LFL +6.8% YY, TOTAL +7% YY
