JAPAN DATA: Offshore Investors Sell Bonds Ahead Of Election, Equity Inflows Up
Last week saw the first week of net outflows from local Japan bonds by offshore investors since the end of 2025. Compared to earlier Jan inflows, the outflow was modest though and cumulative net inflows 2026 to date still sit near ¥4.75trln. This of course came ahead of last weekend's Japan election. The price action in JGBs this week has been encouraging amid assurances around the fiscal/bond issuance outlook and expectations that the government won't stand in the way of BoJ policy normalization. The 10yr JGB is around 2.20%, while longer dated yields continue to correct of Jan highs (30yr back to 3.41%). Focus will be on whether we see further foreign interest come into this space for this past week.
- Offshore interest in Japan equities continues, with a further firm inflow last week. This takes the consecutive weeks of net buying of Japan stocks to seven. Given the break higher in local stock indices this week, that trend may well have continued.
- In terms of Japan outbound flows, we saw local investors selling offshore bonds. Since the start of the year cumulative outflows in this space have been close to flat. Global bond returns have picked up this week amid the US Tsy yield retreat.
- Local investors continued to buy offshore stocks, albeit in more modest size compared to the prior week.
Table 1: Japan Weekly Offshore Investment Flows
| Billion Yen | Week ending Feb 6 | Prior Week |
| Foreign Buying Japan Stocks | 543.2 | 494.6 |
| Foreign Buying Japan Bonds | -464.1 | 2081.1 |
| Japan Buying Foreign Bonds | -365.7 | 713.7 |
| Japan Buying Foreign Stocks | 162.7 | 454.6 |
Source: Bloomberg Finance L.P./MNI
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AUSSIE BONDS: ACGB Oct-36 Auction Results
The AOFM sells A$1000mn of the 4.25% 21 October 2036 Treasury Bond, #TB173:
- Average Yield (%): 4.7623 (prev. 4.7727)
- High Yield (%): 4.7650 (prev. 4.7750)
- Bid/Cover: 3.1950x (prev. 3.7100x)
- Allotted at Highest Accepted Yld as % of Bid Yld (%): 33.3 (prev. 48.2)
- Bidders: 31 (prev. 40), successful 19 (prev. 16), allocated in full 12 (prev. 9)
AUD: GBP/AUD - Support Around 2.0000 Remains Solid
The overnight range was 2.0052 - 2.0129, Asia is trading around {GBPAUD Curncy}. The pair continues to find demand around the 2.0000 area which has proven to be solid support during the last quarter of last year. A sustained break below here is needed to get the momentum to potentially start to trend lower. My bias has been skewed lower but risk/reward probably suggests you pare back down here and resell a break should that play out. On the day, look for any signs of breaking back above the 2.0120-2.0150 area, this could signal a pullback to the pivotal 2.0300-2.0350 resistance. A move back above here is needed to challenge the conviction of shorts.
- The GBP/AUD Average True Range(ATR) for the last 10 Trading days: 96 Points
Fig 1: GBP/AUD spot Daily Chart
Source: MNI - Market News/Bloomberg Finance L.P
AUD: AUD/JPY - First Signs Of Momentum Stalling Above 106.50
The overnight range was 106.18 - 106.70, Asia is currently trading around {AUDJPY Curncy}. The pair stalled its relentless march higher just above 106.50 yesterday, is it just getting its breath back or is it potentially time for some reversion back to the mean. On the day, watch to see if price can re-establish its momentum above 106.00, it has come a long way though so some prudence is warranted. Support is seen back toward the 105.20-105.50 area initially. While price trades above the pivotal 104.00-104.50 area the uptrend remains intact and dips should remain supported.
- The AUD/JPY Average True Range(ATR) for the last 10 Trading days: 58 Points
Fig 1: AUD/JPY spot Daily Chart
Source: MNI - Market News/Bloomberg Finance L.P
