News: UPDATE 1-Japan investors favour U.S., some euro zone debt in December

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    • Investors sold a large amount of French and German bonds
    • Purchasing of Dutch bonds at highest since April 2018
    • Buying of Irish bonds at highest since Sep. 2010

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    Japanese investors bought U.S. and some euro zone bonds in December as they favoured investment in higher yielding assets, while selling large amounts of French and German bonds, data from the Ministry of Finance showed Friday.

    They purchased a net 711.2 billion yen ($6.48 billion) of U.S. bonds in December, the second straight month of buying, and snapped up 222.7 billion yen of Dutch bonds, the largest amount since April last year.

    They also bought a net 207.1 billion yen of Irish bonds, the largest amount of buying since September 2010, the data showed.

    "The likelihood of an interest rate hike in the euro zone is still low. Those who want to buy are still buying, but switching to areas were rates are relatively good as those in the core are low," said Takenobu Nakashima, senior rates strategist at Nomura Securities.

    After climbing to a more than seven-year high of 3.261 percent in October last year, the 10-year U.S. Treasury yield US10YT=RR slipped as low as 2.679 percent in late December.

    Since then, it has fallen further, and last stood at 2.650 percent.

    Not all euro zone debt was in favour: Japanese investors sold a net 479.7 billion yen of French bonds in December, their largest net sales in more than a year, and sold German bonds for a third straight month, selling 132.1 billion yen.

    They also sold a net 65.4 billion yen of UK bonds. The 10-year French bond yield FR10YT=RR touched as low as 0.645 percent on Dec. 6 last year, at that time its lowest since late July last year.

    Since then, it has extended its slide, closing at 0.549 percent on Feb. 7, its lowest close since November 2016.

    The 10-year German Bund yield DE10YT=RR dropped to as low as 0.203 percent on Dec. 20 last year, its lowest since late May last year.

    It also continued its downward trend, last trading at 0.166 percent.

    In total, Japanese investors bought about 408.8 billion yen of foreign currency bonds in December, the smallest amount in four months, the data also showed.

    ($1 = 109.74 yen)

 
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