Japanese Investors Boost Global Treasury Selloff

Japanese banks and insurers boosted global selling in February in efforts to finalize their investment returns by the end of their financial year on Wednesday, according to a report by The Wall Street Journal.

• The 10-year US Treasury yields rose from close to 1% at the end of January to an intraday peak of over 1.77% on Tuesday.
• Large Japanese investors collectively made net sales of ¥2.815 trillion or $25.5 billion worth of foreign bonds from the start of February until March 20. 
• Morgan Stanley Head of the US Rates Strategy Guneet Dhingra said the selling was driven by Japanese banks looking to smooth the volatility of their portfolio returns for the year-end. Most of the upward move in yields in January came during Japanese trading hours.
• The rise in yields caused by the selling affected psychology and market views, pushing other investors to react by selling more themselves. Such pressure moved through the market in March, split between Tokyo and London trading hours.