Japanese long-term bonds see renewed foreign appetite after two weekly outflows

Japanese long-term bonds registered inflows from foreign investors for the first time in three weeks through January 3 after policymakers signaled a more restrained approach to debt issuance, easing concerns about expansionary fiscal policy.

Foreigners bought approximately 273.5 billion yen ($1.74 billion) worth of Japanese long-term debt securities in their first weekly net purchase since December 13, data from Japan's Ministry of Finance showed on Thursday.

Policy makers approved a plan on December 26 to issue the smallest amount of super-long government bonds in 17 years, worth 17.4 trillion yen in the fiscal year beginning on April 1, 2026.

Japanese long-term debt instruments drew record foreign inflows in 2025 of approximately 14.5 trillion yen.

Japanese short-term bills also saw 137 billion yen worth of net foreign inflows last week after facing a 4.45 trillion yen cross-border selloff in the last week of 2025 amid worries abouttheoutlook rising interest rates.

The nation's stocks meanwhile attracted roughly 124.9 billion yen in a second successive week of net foreign purchases. Foreigners pumped around 8.27 trillion yen into the Japanese stock market last year, the most in 12 years.

The Nikkei .N225 logged a record close of 52,518.08 on Tuesday, receding about 1.63% from that level since.

Elsewhere, Japanese investors were net buyers of 236.6 billion yen worth of foreign stocks as they ended a four weeks trend of net sales.

They, however, shed 223.6 billion yen worth of foreign long-term bonds after about 1.05 billion yen worth of net withdrawals in the previous week.

($1 = 156.7800 yen)

Foreign flows into Japanese debt securities https://reut.rs/46jRa8B

Foreign flows into Japanese stocks https://reut.rs/47spgbA

Japanese investments in stocks abroad https://reut.rs/4n6yajq

Japanese investments in overseas debt securities https://reut.rs/4gg1uC8

-Gaurav Dogra/Reuters