Global Investors Eye Japanese Bonds Pre-Election

Foreign investors flooded into the Japanese bond market ahead of the country's lower house election, contributing a net 2.08 trillion yen ($13.26 billion) in long-term bonds. This marks the highest influx since April 12, buoyed by robust demand at a recent 40-year government bond auction.

The auction in question achieved a bid-to-cover ratio of 2.76, the strongest showing since March 2025. In parallel, foreign entities bought a net 1.13 trillion yen in short-term bills, marking the first positive net purchase in three weeks.

Japanese stocks enjoyed foreign inflows for six consecutive weeks, while local investors showed a preference for foreign long-term debts and stocks, investing 713.7 billion yen and 454.6 billion yen, respectively. The Nikkei index hit a record high, although it faced some corrections due to technology stock sell-offs.