Japanese investors net sold foreign bonds for the second consecutive month in July, deterred by declining bond yields in the United States amid heightening expectations of an imminent rate cut by the U.S. Federal Reserve to support the faltering American economy.

Net sellers

According to data from Japan’s Ministry of Finance, Japanese investors offloaded 1.49 trillion yen ($10.12 billion) in long-term overseas bonds following a substantial net disposal of 3.35 trillion yen in the previous month.

They also shed approximately 17 billion yen in short-term instruments.

Meanwhile, domestic investors bought a net 724.2 billion yen in foreign equities last month, reversing two consecutive months of net selling, according to the data from the Japanese Finance Ministry.

British multinational bank Barclays noted that the recent inflows largely continue the trend of significant purchases by investment trusts since the beginning of the year, likely fueled by new Nippon Individual Savings Account flows, coupled with a cessation of substantial sales by trust accounts due to the Japanese currency’s appreciation and a stalled equity rally.

‘Largest purchase’

Data revealed that investment trust management companies acquired a significant 1.14 trillion yen in overseas equities, marking their largest monthly net purchase since January this year.

Conversely, banks and life insurers sold a net 466.4 billion yen and 15.2 billion yen worth of overseas stocks, respectively, data show.