Japanese banks were already returning to U.S. Treasuries before a plunge in global markets made Federal Reserve rate increases an even more distant prospect.

The lenders bought a net ¥855 billion of medium- to long-term foreign bonds in July, and their purchases reached a three-month high in the week of Aug. 9 to Aug. 15, Finance Ministry data show. That marked a reversal after they sold a net ¥5.2 trillion in the three months to June, about 12 times more than a year earlier.

"The bias on foreign bonds is to buy," said Makoto Noji, senior interest rate strategist at SMBC Nikko Securities Inc. in Tokyo. "There's no question that holdings will rise."