Japan’s giant investors look set to bet on yen weakness continuing and boost their purchases of Treasurys over the rest of the year.
That’s the view of money managers in Tokyo, who see conservative buyers like life insurers helping the country reaffirm its position as the biggest foreign holder of Treasurys after heavy selling in recent months. While yields on Japanese government bonds have climbed — to six-year highs — the premium offered by their U.S. counterparts has surged even more as monetary policy in the two economies diverges.
That divergence is seen by some as keeping the yen under pressure as the Federal Reserve raises interest rates. Already at a 20-year low, that will make dollar-denominated assets attractive to Japanese investors.